MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 4, Problem 24PAA
To determine
The vendor expectations of selling coke bottles when
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When trying to assess differences in her customers, Claire—the owner of Claire’s Rose Boutique—noticed a difference between the typical demand of her female versus her male customers. In particular, she found her female customers to be more price sensitive in general. After conducting some sales analysis, she determined that her female customers have the following demand curve for roses: QF = 24 − 2P. Here, QF is the quantity of roses demanded by a female customer and P is the price charged per rose. She determined that her male customers have the following demand curve for roses: QM = 27 − P. Here, QM is the quantity of roses demanded by a male customer. If two unaffiliated customers walk into her boutique, one male and one female, determine the demand curve for these two customers combined (i.e., what is their aggregate demand?).
Earlier this year, 2021, the price of chicken meat rose unexpectedly reached to 250/ kilo at peak from the previous price of 170/ kilo. This 68% increase of price per kilo was primarily caused by excess demand for chicken meat. This is the result of the decrease in consumption for pork meat due to the threat of African Swine Flu (ASF). However, even though consumer shifted preferences, the increase in the price of chicken was perceived to be too high for the budget of consumers. Therefore, sellers realized decrease in their daily aggregate sales from 1,000 kilos to 700 kilos.
1. Illustrate the change in the market equilibrium through a graph.
2. What presumably happened to the total revenues of the sellers during the price hike period?
a.) Compute the price elasticity of demand b.) Derive the total revenue before the hike (TR1), and after the hike (TR2).
Chapter 4 Solutions
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- Earlier this year, 2021, the price of chicken meat rose unexpectedly reached to 250/ kilo at peak from the previous price of 170/ kilo. This 68% increase of price per kilo was primarily caused by excess demand for chicken meat. This is the result of the decrease in consumption for pork meat due to the threat of African Swine Flu (ASF). However, even though consumer shifted preferences, the increase in the price of chicken was perceived to be too high for the budget of consumers. Therefore, sellers realized decrease in their daily aggregate sales from 1,000 kilos to 700 kilos. Illustrate the change in the market equilibrium through a graph. What presumably happened to the total revenues of the sellers during the = price hike period? Compute the price elasticity of demand. Derive the total revenue before the hike (TR1), and after the hike (TR2).arrow_forwardQuestion Earlier this year, 2021, the price of chicken meat rose unexpectedly reached to 250/ kilo at peak from the previous price of 170/ kilo. This 68% increase of price per kilo was primarily caused by excess demand for chicken meat. This is the result of the decrease in consumption for pork meat due to the threat of African Swine Flu (ASF). However, even though consumer shifted preferences, the increase in the price of chicken was perceived to be too high for the budget of consumers. Therefore, sellers realized decrease in their daily aggregate sales from 1,000 kilos to 700 kilos. 1. Illustrate the change in the market equilibrium through a graph. 2. What presumably happened to the total revenues of the sellers during the price hike period? a.) Compute the price elasticity of demand b.) Derive the total revenue before the hike (TR1), and after the hike (TR2).arrow_forwardAn economist estimates that a market has a demand curve of the form P = 37- (1.23) Q and a supply curve of the form P = 1 + (0.984) Q. (See the curves graphed in the figure below.) Accordingly, she estimates that the quantity equilibrium (Qe) in this market will be 16.26 (or 16.260163) and that the equilibrium price (Pe) in the market will be. (Answer may be rounded to nearest hundredth.) Supply X Demand Q OA. $20.84 O B. $12.20 O C. $23.00 O D. $17arrow_forward
- Mattel has conducted studies to determine the best price to set for their Barbie doll figures. Based on data received through these studies, it was calculated that Mattel could sell 3,000 Barbie dolls at a set price of $17.99. However, it was also determined that if the price per doll was reduced to $9.99, they could sell an additional 2,000 Barbie dolls. Find the linear demand equation (price function, y) as a function of the quantity, x, sold.arrow_forward6. Elasticity and total revenue The following graph illustrates the weekly demand curve for motorized scooters in Roanoke. 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. TOTAL REVEN $700 T 8100 7500 0900 6300 5700 5100 PRICE (Dollars per scooter) 4500 3000 325 8 8 8 8 28 28 28 % 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. 25 2300++ 0 0 A A B + Demand emano H on MIM 110 150 135 HHHH++ + 25 50 75 100 125 150 175 200 225 250 275 300 325 PRICE (Dollars per scooter) -A Total Revenue Total Revenue (?) (?)arrow_forwardKroger, the country's leading grocery-only chain, added a line of private label organic and natural foods call Simple Truth to its stores. If you've priced organic foods, you know they are more expensive. For example, a dozen conventionally farmed Grade-A eggs at Kroger costs consumers $2.3, whereas Simple Truth eggs are priced at $4.8 per dozen. One study found that, overall, the average price of organic foods is 85 percent more than that of conventional foods. However, if prices get too high, consumers will not purchase the organic options. One element of sustainability is organic farming, which costs much more than conventional farming, and those higher costs are passed on to consumers. Suppose that a conventional egg farmer's average fixed costs per year for conventionally-farmed eggs are $1 million per year, but an organic egg farmer's fixed costs are three times that amount. Further assume that the organic farmer's variable costs of $2.6 per dozen are twice as…arrow_forward
- The municipal corporations in most parishes in Jamaica have initiated a program to charge residents for garbage disposal based on the number of cans filled per week. The parish of Kingston decided to increase its per-can price from $500 to $750 per week. In the first week, it was found that the number of cans that were brought to the curb fell from 500 to 450 (although the workers complained that the cans were heavier). The chief economist ran the numbers, informed the mayor that the demand for disposal was inelastic, and recommended that the price be raised to maximize town revenue from the program. Four months later, at a price of $1000 per can, the number of cans has fallen to 125 and town revenues are down. What might have happened?arrow_forwardSuppose you are willing to pay $30 for one framed painting in your dorm room and $20 more for a second painting. Your roommate is willing to pay $25 for one painting and has no interest in a second painting. Use the multipoint curve drawing tool to draw your individual demand curve for paintings (A step function with a maximum quantity of 2). Label the curve appropriately. Carefully follow the instructions above, and only draw the required objects. ~ Price ($) 60- 55- 50- 45- 40- 35- 30- 25- 20- 15- 10- 5- 0+ 0 Your Demand Quantity 2 F3arrow_forwardKroger, the country's leading grocery-only chain, added a line of private latbel organic and natural foods call Simple Truth to its stores. If you've priced organic foods, you know they are more expensive. For example, a dozen conventionally farmed Grade-A eggs at Kroger costs consumers $1.5, whereas Simple Truth eggs are priced at $3.5 per dozen. One study found that, overall, the average price of organic foods is 85 percent more than that of conventional foods. However, if prices get too high, consumers will not purchase the organic options. One element of sustainability is organic farming, which costs much more than conventional farming, and those higher costs are passed on to consumers. Suppose that a conventional egg farmer's average fixed costs per year for conventionally-farmed eggs are $1 milion per year, but an organic egg farmer's fixed costs are four times that amount. Further assume that the organic farmer's variable costs of $2.7 per dozen are three times as much as…arrow_forward
- Based on the graphical representation in Figure 1, calculate the price elasticity of demand for ibuprofen. Address the following questions when crafting your answer: What impact would a price increase have on the demand for ibuprofen and on consumer surplus given the price elasticity of demand depicted in Figure 1? What factors usually influence a resource’s price elasticity of demand? In the real world, you might expect the consumption choices of ibuprofen to be affected by brand-name versions of ibuprofen, such as Advil. Would you expect the brand-named products to have the same elasticity of demand as generic ibuprofen?arrow_forwardU.S. food markets consumers viewed beef as a normal good from 1960-1976, but viewed it as an inferior good after that point. This type of change is not abnormal, in that as average household incomes rise, preferences might change. For instance, as households move from poor to middle-class, their consumption of beef might increase. However, as households move from middle- class to upper-middle-class, they might choose to purchase more exotic foods products. Assuming you are a beef producer in 1983, what will happen if incomes continue to increase? a. The marginal cost of beef will increase. b. The marginal cost of beef will decrease. c. The demand for beef will increase. d. The demand for beef will decrease.arrow_forwardThe Camera Shop sells two popular models of digital SLR cameras. 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:arrow_forward
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