As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes before you learn how strong demand is for homes in this large neighborhood. There is a 40 percent chance of low demand and a 60 percent chance of high demand. The corresponding (inverse) demand functions for these two scenarios are P = 500,000 −200Q and P = 900,000 −125Q, respectively. Your cost function is C(Q) = 105,000 + 631,500Q.   How many new homes should you build, and what profits can you expect? Number of homes you should build:  homes   Profits you can expect: $

1 -(Y– 11). V49 Suppose the random variable Y has a mean of 11 and a variance of 49. Let Z = Show that = 0. Hz =E I (Y-D] = 0 %D (Round your responses to two decimal places)

You are the manager of Zokia Ghana Limited, a producer of beans. In Ghana, it is possible to produce beans or groundnut using the same resources. Therefore, producers are able to sw itch from beans to groundnut production depending on market conditions. Consequently, Zokia consulted an Economist who estimated the demand function for beans as: Qbd = 600 – 4Pb – 0.03M – 12Pg + 15T + 6Pe + 1.5N   where Qbd  is the quantity demanded of beans each month, ?? is the average price of beans (in Ghana Cedis), M is the average household income (in GH¢), ?? is the price of groundnut (in GH¢), T is a consumer taste index ranging in value from 0 to 10 (the highest rating), ?? is the price (in GH¢) consumers expect to pay next month for beans, and N is the number of buyers in the market for beans. Assume the following initial values: ??=5, ??= 40, T= 6.5, Pe= 5.25, N= 2000, Qbd = 2479 Explain to your Board of Directors why management should be worried about a rise in the price of groundnut.

When a famous painting becomes available for sale, it is often known which museum or collector will be the likely winner. Yet, the auctioneer actively woos representatives of other museums that have no chance of winning to attend anyway. Suppose a piece of art has recently become available for sale and will be auctioned off to the highest bidder, with the winner paying an amount equal to the second highest bid. Assume that most collectors know that Yakov places a value of $35,000 on the art piece and that he values this art piece more than any other collector. Suppose that if no one else shows up, Yakov simply bids $35,0002=$17,500 $35,000 2 = $17,500 and wins the piece of art. The expected price paid by Yakov, with no other bidders present, is. Suppose the owner of the artwork manages to recruit another bidder, Bob, to the auction. Bob is known to value the art piece at $28,000. The expected price paid by Yakov, given the presence of the second bidder Bob, is.

Yummy Yummy Popcorn, Inc. sells bags of flavored popcorn in a popular mall. As shop owner and operator, you have observed that weekly popcorn sales are well-described by the demand equation: Q = 1,200 - 800P + 2.0A, where A denotes advertising weekly spending (in dollars). You are currently charging $1.50 per bag of popcorn (for which the marginal cost is $.75) and spending $500 per week on advertising. a) Compute the store’s price elasticity and advertising elasticity. Please do fast ASAP fast please

Suppose your firm owns a retirement development that is composed of a gated housing community and a championship level private golf course designed to appeal to retirees that are avid golfers. The development is somewhat isolated and there are no other golf courses within easy driving distance. Obviously, one of the main revenue sources for your company is golf course operations. Suppose the annual individual demand for avid golfers is represented by the following inverse demand function (Q is in annual rounds played): P=100-1.250 Most of the cost to maintain the golf course is fixed in the sense that it is not related to the number of rounds played. Your firm has estimated that the variable cost per round is the result of the cost of leasing and maintaining golf carts and is $20 per round. That is, the variable cost function is: VC (Q) = 200 a. If your firm decides to charge a single price per round of golf, what price should it charge and how many rounds of golf can you expect an…

Fred wants to hire Barney to manage his retail store. Barney can apply a high level of effort (at a cost to him of $30), a medium level of effort (at a cost to him of $10),  or a low level of effort (at a cost to him of $0).  Fred's profits depend not only of the level of Barney's effort but also on the state of consumer demand. Fred believes that demand will be high with probability 50 percent (and therefore demand will be low with probability 50 percent). Fred has determined the following possible profit levels (before paying Barney)  will occur depending on Barney's effort and the state of consumer demand:     Demand     low high effort low 20 40 medium 40 80 high 80 100 Of the choices below, what is the largest percentage range of profit provided to Barney that would ensure Barney would supply high effort?    a. any percent greater than 75.00 percent (3/4).  b. any percent greater than 66.66 percent (2/3).  c. any percent greater than 50.00 percent (1/2).d. any…

You are the manager of a firm that sells a “commodity” in a market that resembles perfect competition, and your analytics team estimates that your cost function is C(Q) = 2Q + 2Q2. Unfortunately, due to production lags, you must make your output decision prior to knowing for certain the price that will prevail in the market. You believe that there is a 60 percent chance the market price will be $350 and a 40 percent chance it will be $700. a. Calculate the expected market price. b. What ouptut should you produce in order to maximize expected profits? c. What are your expected profits?

Jazmah Industries received a patent on their new ozone generator. The product will sell for $471, and it will clean the air inside a home and eliminate 95% of the pollution particles inside the home. Jazmah's market research shows that there are 111 million homes in North America. The firm believes an aggressive marketing campaign focusing on heavily polluted regions of the country will allow them to get about 30% of this market. Their research shows that about 43% of the houses are in heavily polluted areas. How many houses are in Jazmah's target market? $674, 424,900 $ 6, 744, 249, 000 $4, 242, 275,000 $4, 709, 314, 000 $8, 730, 854, 000

A manufacturer of automobiles is planning a new model and wants to determine the responsiveness of demand in a number of scenarios. The demand function for the new model is given by the following function: Q = 30000 – 3P + 2000ln(PA) + Y Where Q is the quantity sold of the new model, P is the price for the new model, PA is the price of the competitor’s model and Y is the annual income of a typical purchaser. The new model price is planned to be £20,000 and the competitor is charging £25,000. The annual income of a typical purchaser is £30,000. (a) The manufacturer wishes to determine the responsiveness of the demand for the new model if the price of a competitor’s model changes. Which measure of elasticity would be appropriate to fulfil this requirement? And provide a calculation of its value.