The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: 200, Camera B Price: 300). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA 198 0.5PA + 0.25PB NB = 305 + 0.07PA - 0.6PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max profit occurs at Camera A price of $ Max profit occurs at Camera B price of $

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Panini, a popular sandwich shop, offers 3 types of sandwiches: Grill vegetables, grilled chicken and pastrami. The table below provides demand data: Pastrami Grilled Vegetables Grilled Chicken Demand per hour 25 25 10 There are up to five steps in the process of making sandwiches, listed below with activity times. Only 50% of customers want their sandwich toasted, no matter which sandwich is ordered. Step Grilled Vegetables Grilled Chicken Pastrami Cut bread 75 minutes .75 minutes .75 minutes Grill 1.9 minutes 1.9 minutes Slice meat 3 minutes Toast 2 minutes 2 minutes 2 minutes Wrap .75 minutes .75 minutes .75 minutes Suppose Panini employs 1 worker at each step. What is the implied utilization of the bottleneck of this process?

Noticing that profits on college text books are very high, the Beast Book Store (BBS), with the help of a venture capitalist, has gone into text book publishing. In its current production range its average total cost is approximately equal to its marginal cost which it estimates to be about $25. It has estimated that price elasticity of demand for its books at current price levels to be about -1.5. The manager of BBS uses mark-up pricing to price the books that it sells using a 150% mark-up (even with this mark-up BBS can still underprice most other book publishers). Assuming that BBS wants to maximize short-term profits on its book sales and initially enjoys a monopoly in the local college textbook production market, is this a good pricing procedure? Harvard and other local colleges soon start publishing companies of their own increasing competition and causing the price elasticity of demand for BBS books to increase to -2.0. Assuming that BBS’s demand curve that generates this -2.0…