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) 9987 10 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: SO ● Demand curve

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) 9987 10 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: SO ● Demand curve

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter5: Buying The Necessities

Section: Chapter Questions

Problem 20AA

See similar textbooks

Similar questions

On the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $50, $75, $100, $125, $150, $175, and $200 per scooter. TOTAL REVENUE (Dollars) 2610 2430 2250 2070 1890 1710 1530 1350 1170 990 Δ ΔΔ Δ 0 25 50 75 100 125 150 175 200 225 250 275 300 325 PRICE (Dollars per scooter) Total Revenue ? According to the midpoint method, the price elasticity of demand between points A and B is approximately 0.69 ▼ Suppose the price of scooters is currently $125 per scooter, shown as point A on the initial graph. Because the demand between points A and B is inelastic , a $25-per-scooter decrease in price will lead to a decrease in total revenue per week.
2. The relationship between price and demand per month for a consumer product is p = 3500 -1.1D5 where p is the price per unit in dollars and D is the demand in units. The fixed cost is $300 per month and the variable cost is $4.00 per unit. What is the optimal number of units that should be produced and sold per month? a. b. What is the maximum profit per month?
The following graph illustrates the weekly demand curve for motorized scooters in Scottsdale. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. PRICE (Dollars per scooter) TOTAL REVENUE (Dollars) 8700 8100 7500 6900 6300 5700 5100 4500 3900 325 3300 300 275 250 225 200 175 150 125 100 75 On the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $50, $75, $100, $125, $150, $175, and $200 per scooter. (?) 50 25 0 0 10 20 *4 0 25 50 Xo Demand 30 40 50 60 70 80 90 100 110 120 130 QUANTITY (Scooters) Total Revenue 75 100 125 150 175 200 225 250 275 300 325 PRICE (Dollars per scooter) (?) Total Revenue According to the midpoint method, the price elasticity of demand between points A and B is approximately
The following graph illustrates the weekly demand curve for motorized scooters in Madison. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. PRICE (Dollars per scooter) 325 300 275 250 225 200 175 150 125 100 75 50 25 0 0 10 A + 20 30 X B Demand 40 50 60 70 80 QUANTITY (Scooters) 90 100 110 120 130 Total Revenue ?
The following graph shows the daily demand curve for bippitybops in Denver. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. PRICE (Dollars per bippitybop) 240 220 200 180 160 140 120 100 80 8 60 40 20 0 mớ H + 0 9 18 27 36 45 54 63 72 81 QUANTITY (Bippitybops per day) * Demand 90 B 99 108 Total Revenue (?)
"The Hickory Cabinet and Furniture Company makes chairs. The fixed cost per month of making chairs is $7,500, and the variable cost per chair is $40. Price is related to demand, according to the following linear equation: v = 400 - 1.2p Graphically illustrate the profit curve developed . Indicate the optimal price and the maximum profit per month.
The blue curve on the following graph represents the demand curve facing a firm that can set its own prices. Use the graph input tool to help you answer the following questions. You will not be scored on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per unit) 100 TOTAL REVENUE (Dollars) 90 80 20 10 0 1250 1125 1000 875 750 625 500 On the previous graph, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 10, 20, 25, 30, 40, or 50 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. 375 250 125 + 0 0 0 Demand 5 10 15 20 25 30 35 40 45 50 QUANTITY (Units) + 5 20 10 15 25 30 35 QUANTITY (Number of units) 40 Graph Input Tool Market for Goods 45 50 Quantity Demanded (Units)…
QUESTION 9 John lives in the small island nation of Vanuatu, and is a producer in the perfectly competitive market for galip nuts. A summary of some of his costs, which are given in the local currency (the "vatu"), is shown below. Quantity (kg of galip nuts) 0 30 60 90 120 150 Total Fixed Cost TFC (vatu) 5600 5600 5600 5600 5600 5600 Total Variable Cost TVC (vatu) 0 640 1520 2640 4800 9120 If John's profit-maximising quantity is 90kg of galip nuts, what is the marginal revenue per kilogram of galip nuts at this profit maximising quantity? Answer to the nearest whole number.
(1.) Johnny Rockabilly has just finished recording his latest CD. His record company marketing department determines that the demand for the CD is as follows: Number of CDs Price $24 10,000 22 20,000 20 30,000 18 40,000 6 50,000 3 60,000 The company can produce the CD with no fixed cost and a variable cost of $12 per CD. a. Find total revenues and marginal revenues for each of the quantities. b. What quantity of CDs would maximize profit? What would the price be?
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per unit) 250 225 200 175 150 125 100 75 50 25 0 0 5 10 Demand 15 20 25 30 35 40 45 50 QUANTITY (Units) Graph Input Tool Market for Goods Quantity Demanded (Units) Demand Price (Dollars per unit) 25 125.00 ?
Student Resources Working at Clayton.... 3/3 practice Gigantic Pharmaceutical Corporation has a patent on a prescription drug, making it the only manufacturer of that prescription drug. Gigantic is currently earning a positive economic profit. (a) Draw a correctly labeled graph for Gigantic and show each of the following. (i) The profit-maximizing quantity, labeled QG (ii) The profit-maximizing price, labeled PG (iii) The average total cost curve, labeled ATC (iv) The area representing the consumer surplus, shaded completely (b) Suppose the demand for the prescription drug increases, and Gigantic hires its warehouse workers in a perfectly competitive labor market. (i) What will happen to Gigantic's demand for warehouse workers? Explain. (ii) What will happen to the wage rate Gigantic pays its warehouse workers and the number of warehouse workers it hires? (c) After Gigantic's patent expires, another firm enters the prescription drug market and produces an identical drug that sells for…
On the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 6, 12, 15, 18, 24, and 30 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. Calculate the total revenue if the firm produces 6 versus 5 units. Then, calculate the marginal revenue of the sixth unit produced. The marginal revenue of the sixth unit produced is________. Calculate the total revenue if the firm produces 12 versus 11 units. Then, calculate the marginal revenue of the 12th unit produced. The marginal revenue of the 12th unit produced is_________.