16. Revenue with Substitutable Products. The Camera Shop sells two popular modelsof digital single lens reflex (DSLR) cameras. The sales of these products are not inde-pendent; if the price of one increases, the sales of the other increases. In economics.these two camera models are called substitutable products. The store wishes to estab-lish a pricing policy to maximize revenue from these products. A study of price andsales data shows the following relationships between the quantity sold (N) and price(P) of each model:NA 195 0.6PA + 0.25PBN = 301+0.08PA-0.5PBa. Construct a model for the total revenue and implement it on a spreadsheet.b. Develop a two-way data table to estimate the optimal prices for each product inorder to maximize the total revenue. Vary each price from $250 to $500 in incre-ments of $10.

In part (a), we need to construct a model for the total revenue. I provided the formula for total…

Answered: 16. Revenue with Substitutable…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7.1
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8. Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gumdrops, frizzles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gumdrops decreases by 8%, the quantity of frizzles sold decreases by 6% and the quantity of kipples sold increases by 8%. Your job is to use the cross-price elasticity between guppy gumdrops and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…
26) Larry's Carpet Cleaners can influence demand by advertising. Larry charges $50 per carpet, and he cleans 150 carpets per month. The price elasticity of demand is -4, and Larry spends $500 per month on advertising. If Larry is maximizing profits, calculate the advertising elasticity of demand.
4. Calculate demand functions with different intercept and draw on graph. Qd = 1,400 – 10P Qdz = 1,700 – 10P Qd= 1,100 – 10P 160 140 Price Demandz = Demand; = 120 1,400 – 10P 1,700 – 10P | 1,100 – 10P 100 Demand = 20 80 40 60 60 80 100 40 120 140 20 160 400 500 600 700 S00 900 1000 1100 1200
explain how the demand curves for normal productsand for prestige products differ. What are demandshifts and why are they important to marketers? Howdo firms go about estimating demand? How can marketers estimate the elasticity of demand?
Carlos's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Carlos produced four fire engines, but he has decided to increase production to five fire engines. The following graph shows the demand curve Carlos faces. As you can see, to sell the additional engine, Carlos must lower his price from $105,000 to $90,000 per fire engine. Note that while Carlos gains revenue from the additional engine he sells, he also loses revenue from the initial four engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial four engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $90,000. PRICE (Thousands of dollars per fire engine) 150 135 - 120 106 60 45 15 0 + Carlos 0 1 True + 2 False Demand + 6 3 4 5 7 QUANTITY (Fire…
As competitors enter a market, demand becomes more meaning the demand curve shifts and becomes O elastic: in: flatter O elastic; out; flatter O inelastic; in; stceper O inclastic: cout flatter
Does better pricing of the product help to increase purchase intention of product. plz explain in detail
8. Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin patties decreases by 1%, the quantity of raskels sold decreases by 18% and the quantity of kipples sold increases by 3%. Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…
6.18 please explain

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