ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Suppose a movie theater determines it can charge different prices to patrons who go to weekday matinees and people who attend evening and weekend shows. The movie theater's goal is to increase total revenue. See Hint The price elasticity of demand for weekend and evening patrons is -0.50, and the price elasticity of demand for matinee moviegoers is -2.80. Based on the price elasticity of demand for each group of people, how should the movie theater adjust its prices? Choose one: O A. Raise the price for matinee moviegoers, and keep the price the same for weekend and evening patrons. O B. Lower the price for matinee moviegoers, and raise the price for weekend and evening patrons. O C. Lower the price for matinee moviegoers, and keep the price the same for weekend and evening patrons. O D. Raise the price for matinee moviegoers, and lower the price for weekend and evening patrons.arrow_forwardGeorge has been selling 7,000 T-shirts per month for $7.00. When he increased the price to $9.00, he sold only 6,000 T-shirts. Which of the following best approximates the price elasticity of demand? -0.6769 -0.6154 -0.3077 -0.5538 Suppose George's marginal cost is $4 per shirt. Before the price change, George's initial price markup over marginal cost was approximately . George's desired markup is . Since George's initial markup, or actual margin, was than his desired margin, raising the price wasarrow_forwardExplain why the choice between 1, 2, 3, 4, 5, 6, 7, and 8 “units,” or 1000, 2000, 3000, 4000, 5000, 6000, 7000, and 8000 movie tickets, makes no difference in determining elasticity in Table 6.1.arrow_forward
- A firm with pricing power (i.e. a price-maker) estimates that the elasticity of demand for its product is __A= -3.50___. To maximize profits by what percentage above cost should it markup its price?arrow_forwardA topic on optimal pricing, elasticity, stay-even analysis, or cost-based pricing.arrow_forwardPrice Quantity Demanded Price Elasticity of Demand Total Revenue Degree of Elasticity, i.e., elastic, inelastic etc. Table above shows a straight-line demand curve that confronts a toy company. $6 1 (a) In column 3, compute the coefficient for the price elasticity of demand at each price using the midpoints formula and In column 4, calculate total revent (b) Describe the character of elasticity in column 5, across the prices based on the total revenue test and the elasticity coefficient. (c) Does a straight-line demand curve have constant elasticity? Explain. (d) Of what practical significance is your answer to (c)? 4 4 21 ALT+F10 (PC) or ALT+FN+F10 (Mac).arrow_forward
- PLEASE LABEL, ANSWER CLEAR AND COMPLETLY! THANKS!arrow_forwardABC Cosmetic is going to launch a new special cleansing cream for men. It has aconstant marginal cost of $30 and the estimated price elasticity of demand is –4/3.What price should ABC Cosmetic charge for the cream? Show your calculation.arrow_forwardYou are working trying to estimate the proper price to charge a market for the firm that sells beer in Lancaster Pennsylvania. They estimated that the demand curve for the market is Quantity demanded=20-2P. The firm currently prices the good at 8 dollars. They want to move the price to 6 dollars in a attempt to increase profits. 1) What is the elasticity for this move in price (Use the midpoint method for elasticity) make sure you show your work? 2) Now you are contacted by a different branch of this company that is in a lower priced (Scranton P.A.) market with the same demand curve. They want to move the price from 2 to 5 dollars. What is the elasticity of this change (Use the midpoint method)? 3) Now suppose you find out that there is a similar product that impacts the Quantity demanded for a product. The relationship is Qd=15+Pb. Now suppose the price (Pb) of the other good is 5 and goes to 6. What is the Cross-price elasticity of the good?arrow_forward
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