The demand curve for the new computer game, Rock and Roll Trivia, is given as follows: Q=200-5P-.1Pc-.5Pd+.2A+I Where P is the price of the game, Pc is the price of a computer, Pd is the price of a diskette, A is the level of advertising, and Q is the level of income. From this demand curve, one can infer that: OA. computers and Rock and Roll Trivia are substitutes. B. computers are a normal good. OC. Rock and Roll Trivia is an inferior good. D. computers and Rock and Roll Trivia are complements.
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- ABC Co, a store that sells various types of sports clothing and other sports items, is planning to introduce a new design of Arizona Diamondbacks’ baseball caps. A consultant has estimated the demand curve to be Q = 2,000 - 100P where Q is cap sales and P is price. a. How many caps could ABC sell at $6 each? b. How much would the price have to be to sell 1,800 caps? c. Suppose ABC were to use the caps as a promotion. How many caps could ABC give away free? d. At what price would no caps be sold? e. Calculate the point price elasticity of demand at a price of $6ABC Co, a store that sells various types of sports clothing and other sports items, is planning to introduce a new design of Arizona Diamondbacks’ baseball caps. A consultant has estimated the demand curve to be Q = 2,000 - 100P where Q is cap sales and P is price. How many caps could ABC sell at $6 each? How much would the price have to be to sell 1,800 caps? Suppose ABC were to use the caps as a promotion. How many caps could ABC give away free? At what price would no caps be sold? Calculate the point price elasticity of demand at a price of $6.The following table displays data about demand for smart phones. Points P Q A 6060 3,0003,000 B 7070 2,8002,800 C 8080 2,6002,600 D 9090 2,4002,400 E 100100 2,2002,200 F 110110 2,0002,000 G 120120 1,8001,800 H 130130 1,6001,600 Step 1 of 2 : Using the midpoint method, calculate the price elasticity of demand from Point F to Point G. If necessary, round all intermediate calculations and your final answer to two decimal places.
- Suppose the average student's demand for Holy Cross football tickets is as follows: $20 $14 s10 $7 $5 1 2 Price Quantity 3 4 5 a. If Holy Cross is a profit maximizer and it can only sell single game tickets, what price will Holy Cross charge, how many tickets will the average student buy, and how much profit will the college make per student (assuming MC = 0)? b. If Holy Cross is a profit maximizer but instead sells season-tickets for all 5 home games, what price will the college charge and how much profit will the college make per student? c. Give at least 2 other reasons besides higher ticket revenue why Holy Cross would prefer to sell season tickets rather than individual game tickets. 2.Suppose that the market for air travel between Chicago and Dallas isserved by just airlines, United and American. An economist has studied thismarket and has estimated that the demand curves for round-trip tickets foreach airline are as follows:QdU = 10,000 - 100PU + 99PA (United’s demand)QdA = 10,000 - 100PA + 99PU (American’s demand) where PU is the pricecharged by United, and PA is the price charged by American.a. Suppose that both American and United charge a price of $300 each for around-trip ticket between Chicago and Dallas. What is the price elasticityof demand for United flights between Chicago and Dallas?b. What is the market-level price elasticity of demand for air travel betweenChicago and Dallas when both airlines charge a price of $300? (Hint:Because United and American are the only two airlines serving theChicago–Dallas market, what is the equation for the total demand for airtravel between Chicago and Dallas, assuming that the airlines charge thesame price?)14. The only DVD rental club available to you charges $4 per movie per day. If your demand curve for movie rentals is given by P = 20 – 2Q, where P is the rental price ($/day) and Q is the quantity demanded (movies per year), what is the annual maximum fee you would be willing to pay to join the club?
- Suppose widgets have a price elasticity of demand equal to -1,95 and a cross elasticity of demand equal to 2 with dundles. What are the pricing options for a firm that sells widgets? ExplainJoe Smiley buys his mobile phone services from Sprint, the sole provider in his state of Wyoming. Sprint offers the following pricing plans: a fee of 10 dollars per month and 50 minutes of free calls per monthor a fee of 20 dollars per month and 100 minutes of free calls. Under both plans the price of additional calls is 25 cents per minute. Joe Smiley's demand curve for mobile phone services is P=100 - 0.5Q where P is measured in cents/minute and Q is measured in minutes per month. Answer the following questions: a) suppose Joe Smiley subscribes to the first plan (10 dollar fee and 50 free minutes)(i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? b) suppose Joe Smiley subscribes to the second plan (20 dollar fee and 100 free…How might advertising lead to a shift in the demand curve
- PART I: STREAMING SERVICES (NETFLIX, AMAZON, HULU etc) – SUBSTITUTES OR COMPLEMENTS?From the question above provide 2 Reasons why you are arguing whether the Streaming Services (Netflix, Amazon, Hulu etc) are substitutes or complements – briefly rationalize why using concepts related to cross elasticity.In the world of French high cuisine, a three-star rating from the Michelin Red Guide is a widely accepted indicator of gastronomic excellence. French consumers consider Gault Milleau, another restaurant guide, not as authoritative as the Michelin guide because Gault Milleau, unlike Michelin, accepts advertising and its critics accept free meals. Why are guides' ratings important to restaurant owners and chefs? Discuss the effect of a restaurant's rating on the demand for the restaurant. a. A) It provides information to consumers regarding the restaurant's quality, thus, reducing the moral hazard problem. A high rating can increase demand B)It provides information to consumers regarding the restaurant's quality, thus, reducing the adverse selection problem. A high rating can increase demand. b. Why do advertising and free meals taint the credibility of Gault Milleau? Discuss the moral hazard problem of Gault Milleau's ratings. A) The critics may be biased toward restaurants that give…Joe Smiley buys his mobile phone services from Sprint, the sole provider in his state of Wyoming. Sprint offers the following pricing plans: a fee of 10 dollars per month and 50 minutes of free calls per month or a fee of 20 dollars per month and 100 minutes of free calls. Under both plans the price of additional calls is 25 cents per minute.Joe Smiley's demand curve for mobile phone services is P=100 - 0.5Q where P is measured in cents/minute and Q is measured in minutes per month. a) suppose Joe Smiley subscribes to the first plan (10 dollar fee and 50 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? b) suppose Joe Smiley subscribes to the second plan (20 dollar fee and 100 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? c) which plan would Joe Smiley choose? He will choose plan (b) because it maximizes his surplus