ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Draw diagrams to show how the curves in the figure below would change in each of the following cases:
1. A rival company producing a similar brand slashes its prices.
2. The cost of producing Apple-Cinnamon Cheerios rises from $2 to $3 per pound.
3. General Mills introduces a local advertising campaign costing $10,000 per week.
In each case, can you say what would happen to the price and the profit?
Price, P (dollars per pound)
10
9
5
4
3
2
0
0
E
Feasible set
20,000
40,000
60,000
Quantity of Cheerios, Q (pounds)
80,000
Isoprofit curve: $60,000
Isoprofit curve: $34,000
Isoprofit curve: $10,000
● Isoprofit curve: $0
● Demand curve
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Transcribed Image Text:Draw diagrams to show how the curves in the figure below would change in each of the following cases: 1. A rival company producing a similar brand slashes its prices. 2. The cost of producing Apple-Cinnamon Cheerios rises from $2 to $3 per pound. 3. General Mills introduces a local advertising campaign costing $10,000 per week. In each case, can you say what would happen to the price and the profit? Price, P (dollars per pound) 10 9 5 4 3 2 0 0 E Feasible set 20,000 40,000 60,000 Quantity of Cheerios, Q (pounds) 80,000 Isoprofit curve: $60,000 Isoprofit curve: $34,000 Isoprofit curve: $10,000 ● Isoprofit curve: $0 ● Demand curve
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