ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- 3. The Burrito Barn is considering a price reduction on the Firegut Burrito, which currently sells for the price of $5.00. Giuseppe, the proprietor of Burrito Barn, knows the price elasticity for the Firegut is roughly equal to -2.3 over the range being considered for the price change. The Firegut has been selling at the brisk pace of 500 burritos per week. To increase market share, Giuseppe would like to increase sales to 750 per week. What price should Giuseppe set?arrow_forward2. Refer to the following graph to answer Question #1 40 35 30 25 20 16 15 12 10 5 I 10 20 MC ATC P₁ AVC P₂ P3 30 45 50 60 70 80 90 100 110 a) What is profit if the price is P1? b) What is profit if the price is P2? c) What is the profit maximizing level of output if the price falls to P3?arrow_forward4. Your firm produces a computer software called "Model It", which is sold to other businesses. Its demand has been estimated to be: QM = 550- 4PM +1.5PS - 2.SI, where, QM denotes units sold of "Model It" software, PM denotes "Model It's" price, Ps denotes the price of a best-selling competitor, and I is the average income of its consumers. a. Currently, PM = $110, Ps= $152, and I = 60. What is the estimated quantity demanded (QM) for "Model It" software? b. What is the change in QM that results from a one unit ($1) change in the PM? C. Holding the values Ps= $152 and I = 60 equal, state the demand function for "Model It" in the format QM = ao + a₁PM and its demand curve (inverse demand function) PM = a - bQM. d. Assume that the price of the competitor's product (Ps) changes from $152 to $172 and that I is still $60, state the new demand function for "Model It" (the format should be QM = αo + α1PM) and its (inverse) demand curve (PM= a - bQM).arrow_forward
- Could someone explain the easy way to find the partial derivative in these problems? Suppose the demand equation is: Q = 120 - 0.75p. What is the price elasticity of demand if the price is $60 per unit and output is 75 units? The price elasticity of demand is (Enter a numeric response using a real number rounded to two decimal places.)arrow_forwardBudweiser and Heineken: % change in demand for Budweiser = 40% % change in price of Heineken = 10% Refer to the following information above regarding two goods. Based on the cross-price elasticity of the two goods would regulators consider the goods to be in the same market? Yes, because the cross price elasticity is 4, which means the goods are considered to be complements in the same market. Yes, because the cross price elasticity is 4, which means the goods are considered to be substitutes in the same market. Yes, because the cross price elasticity is 4, which means the goods are not considered to be substitutes in the same market. No, because the cross price elasticity is 4, which means the goods are not considered to be substitutes in the same market.arrow_forwardThe American Pharmaceutical Company (APC) has a policy that all capital investments must have a five-year or less discounted payback period in order to be considered for funding. The MARR at APC is 9% per year. Is the above project able to meet this benchmark for funding? What is the payback period?arrow_forward
- . Do you consider yourself a member of any brand communities (formal or informal)? If so, what effect do these groups have on your purchasing behavior?arrow_forwardTyped plzzzz And Asaparrow_forward6. The cartel Consider a town in which only two residents, Rajiv and Simone, own wells that produce water safe for drinking. Rajiv and Simone can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price (Dollars per gallon) 6.00 Quantity Demanded Total Revenue (Gallons of water) (Dollars) 0 0 5.50 45 247.50 5.00 90 450.00 4.50 135 607.50 4.00 180 720.00 3.50 225 787.50 3.00 270 810.00 2.50 315 787.50 2.00 360 720.00 1.50 405 607.50 1.00 450 450.00 0.50 495 247.50 0 540 0 Suppose Rajiv and Simone form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output is gallons. As part of their cartel agreement, Rajiv and Simone agree to split production equally. Therefore, Rajiv's profit is $ and Simone's profit is $ Suppose that Rajiv and Simone have been successfully operating as a cartel. They each charge the monopoly price and sell half of…arrow_forward
- A1). The price, p, that a bookstore charges for a special gift edition of a popular trilogy is related to the demand, q, by the equation 100pq + q? = 5,000,000. Suppose the price is currently set at $40. (a). At what rate is the demand currently changing with respect to this price? (Include units) (b). At what rate is the revenue currently changing with respect to this price? (Hint: use the chain rule). (Include units). (c). Suppose the demand is currently increasing at a rate of 50 copies per month. How fast is the price currently changing per month? (again, assume the price is currently $40).Include units.arrow_forwardplease correct/fix my asnwers and complete the problem. thank you!arrow_forwardQ4. Refer to the figure below. If the firm is producing the level of output which maximizes profit, its total revenue is ________. (Hint: after finding the profit-maximizing quantity, use the demand curve to identify the corresponding price.) a.) $480 b.) $420 c.) $160 d.) $540arrow_forward
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