Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 2, Problem 17PAA
To determine
To find:
The prices of the products sold by G.R. Dry Foods.
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G.R. Dry Foods Distributors specializes in the wholesale distribution of dry goods, such as rice and dry beans. The firm’s manager is concerned about an article he read in this morning’s The Wall Street Journal indicating that the incomes of individuals in the lowest income bracket are expected to increase by 10 percent over the next year. While the manager is pleased to see this group of individuals doing well, he is concerned about the impact this will have on G.R. Dry Foods.What do you think is likely to happen to the price of the products G.R. Dry Foods sells? Why?
The price will increase, because dry beans and rice are normal goods.
The price will increase, because dry beans and rice are inferior goods.
The price will decrease, because dry beans and rice are inferior goods.
The price will decrease, because dry beans and rice are normal goods.
R. Dry Foods Distributors specializes in the wholesale distribution of dry goods, such as rice and dry beans. The firm’s manager is concerned about an article he read in this morning’s Wall Street Journal indicating that the incomes of individuals in the lowest income bracket are expected to increase by 10 percent over the next year. While the manager is pleased to see this group of individuals doing well, he is concerned about the impact this will have on G.R. Dry Foods.
Please explain what will happen to the price of the products G.R. Dry Foods sells?
Why?
11. You are the manager of a midsized company that assembles personal computers. You
purchase most components-such as random access memory (RAM)-in a competitive
market. Based on your marketing research, consumers earning over $80,000 purchase
1.5 times more RAM than consumers with lower incomes. One morning, you pick up a
copy of The Wall Street Journal and read an article indicating that input components for
RAM are expected to rise in price, forcing manufacturers to produce RAM at a higher
unit cost. Based on this information, what can you expect to happen to the price you
pay for random access memory? Would your answer change if, in addition to this change
in RAM input prices, the article indicated that consumer incomes are expected to fall
over the next two years as the economy dips into recession? Explain. (LO1, LO3, L05)
12. You are the manager of a firm that no d
Chapter 2 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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