Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 6.1.10PA
To determine
Whether the publisher’s analysis is correct or not.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The publisher of a magazine gives his staff the following information:
Current price
Current sales
Current revenue
Current total costs
$2.00 per issue
150,000 copies per month
$300,000 per month
$450,000 per month
He tells the staff, "Our costs are currently $150,000 more than our revenues each
month. I propose to eliminate this problem by raising the price of the magazine to
$3.00 per issue. This will result in our revenue being exactly equal to our cost."
Refer to the table above, which of the following statements is correct?
The publisher's analysis is correct only if the demand is elastic.
The publisher's analysis is correct only if the demand is perfectly elastic.
The publisher's analysis is correct only if the demand is unit elastic.
The publisher's analysis is correct only if the demand is perfectly inelastic.
Practice #6
Francine is a a dental floss tycoon living in Montana. She faces the following demand curve for her product:
Price ( in $/unit) Quantity demanded
2.50 1000
2.20 2000
1.90 3000
1.60 4000
1.30 5000
1.00 6000
.70 7000
.40 8000
Francine has been told by her brother, who is currently taking a marketing class, that if she lowers her price by one increment(for example; changing price from .70 to .40, she will capture market share and increase total revenue. All of her advisors within the company have assured Francine that her brother's advice may be correct, BUT the above demand curve will not change. Assume that Francine knows the above demand curve will not change and is also considering her brother's advice. The prices can only change in…
Rogers purchased 60 tins of paracetamol at shs. 12,500 each from Abacus Pharma. Two months later the cost of a paracetamol tin increased by 35% and Tom Purchased 25 tins of paracetamol.
a) Illustrate the above information on a graph.
b) Calculate the price elasticity of demand and interpret your result
c) Mention the demand and supply shifters of healthcare services other than price
Chapter 6 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 6 - Write the formula for the price elasticity of...Ch. 6 - If a 10 percent increase in the price of Cheerios...Ch. 6 - Prob. 6.1.3RQCh. 6 - Prob. 6.1.4RQCh. 6 - Prob. 6.1.5PACh. 6 - Prob. 6.1.6PACh. 6 - Prob. 6.1.7PACh. 6 - Prob. 6.1.8PACh. 6 - Prob. 6.1.9PACh. 6 - Prob. 6.1.10PA
Ch. 6 - What are the key determinants of the price...Ch. 6 - Prob. 6.2.2RQCh. 6 - Prob. 6.2.3PACh. 6 - According to a news story about the bus system in...Ch. 6 - Prob. 6.2.5PACh. 6 - Prob. 6.2.6PACh. 6 - The entrance fee into Yellowstone National Park in...Ch. 6 - Prob. 6.3.1RQCh. 6 - Prob. 6.3.2RQCh. 6 - Prob. 6.3.3PACh. 6 - Prob. 6.3.4PACh. 6 - Prob. 6.3.5PACh. 6 - Prob. 6.3.6PACh. 6 - Prob. 6.3.7PACh. 6 - Prob. 6.3.8PACh. 6 - Prob. 6.3.9PACh. 6 - Prob. 6.3.10PACh. 6 - Prob. 6.3.11PACh. 6 - Prob. 6.3.12PACh. 6 - Define the cross-price elasticity of demand. What...Ch. 6 - Prob. 6.4.2RQCh. 6 - Prob. 6.4.3PACh. 6 - Prob. 6.4.4PACh. 6 - Prob. 6.4.5PACh. 6 - Prob. 6.4.6PACh. 6 - Prob. 6.4.7PACh. 6 - Prob. 6.4.8PACh. 6 - Prob. 6.4.9PACh. 6 - Prob. 6.5.1RQCh. 6 - Prob. 6.5.2PACh. 6 - Prob. 6.5.3PACh. 6 - Prob. 6.5.4PACh. 6 - Prob. 6.5.5PACh. 6 - Prob. 6.5.6PACh. 6 - Prob. 6.5.7PACh. 6 - Write the formula for the price elasticity of...Ch. 6 - Prob. 6.6.2RQCh. 6 - Prob. 6.6.3PACh. 6 - Prob. 6.6.4PACh. 6 - Prob. 6.6.5PACh. 6 - Prob. 6.6.6PACh. 6 - Prob. 6.6.7PACh. 6 - Prob. 6.6.8PACh. 6 - Prob. 6.6.9PACh. 6 - Prob. 6.2CTE
Knowledge Booster
Similar questions
- Based on Zangwill (1992). Murray Manufacturing runs a day shift and a night shift. Regardless of the number of units produced, the only production cost during a shift is a setup cost. It costs $8000 to run the day shift and $4500 to run the night shift. Demand for the next two days is as follows: day 1, 2000; night 1, 3000; day 2, 2000; night 2, 3000. It costs $1 per unit to hold a unit in inventory for a shift. a. Determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. (Note: Not all shifts have to be run.) b. After listening to a seminar on the virtues of the Japanese theory of production, Murray has cut the setup cost of its day shift to $1000 per shift and the setup cost of its night shift to $3500 per shift. Now determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. Show that the decrease in setup costs has actually raised the average inventory level. Is this…arrow_forwardFrancine is a a dental floss tycoon living in Montana. She faces the following demand curve for her product: Price ( in $/unit) Quantity demanded 2.50 1000 2.20 2000 1.90 3000 1.60 4000 1.30 5000 1.00 6000 .70 7000 .40 8000 Francine has been told by her brother, who is currently taking a marketing class, that if she lowers her price by one increment(for example; changing price from .70 to .40, or raising price from .40 to .70) she will capture market share and increase total revenue. All of her advisors within the company have assured Francine that her brother's advice may be correct, BUT the above demand curve will not change. Assume that Francine knows the above demand curve will not change and is also considering her brother's advice. The prices can only…arrow_forwardBigSwaba Corp produces virus home test kits which it sells in the market. It pays a marketing company to post Instagram images of people using the kits in the comfort of their own homes. The demand for the kits and cost of production are as follows: 1 1 Cost: C=200+=q´ +m 1/2 Demand: p=48+m/: Where m is the firm's marketing expenditure. Assume the CEO of BigSwaba asks you to help the company maximize profit. а. How many kits should the company sell and at what price? b. What is the demand elasticity at this output level? C. What should their marketing budget be? Assume the CEO of BigSwaba realizes her bonus will determined not by profits, but by the firm's revenue. Maintaining the same marketing budget as in part a: d. What quantity should the firm produce to maximize revenue?arrow_forward
- Bill runs a business that makes custom-printed towels. It will cost him $8 each to purchase and print on towels, and he will have to pay a rent of $1,700 per month for him workshop. Based on market research, Bill estimates that he can sell custom towels for $25 each. a) Calculate the number of towels he needs to sell per month to break-even. towels b) Calculate the break-even in dollars (round off to the nearest cent).arrow_forwardQuestion content area Part 1 Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 25% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only thing to be changed. The bakery currently makes 1,800 loaves per month. The pay will be $ 8 per hour for employees and each employee works 160 hours per month. Charles Lackey can also improve the yield by purchasing a new blender. The new blender will mean an increase in his investment. This new blender will mean an increase in his costs of $ 100 per month, but he will achieve the same…arrow_forwardPaulina sells beef in a competitive market where the price is $6 per pound. Her total revenue and total costs are given in the table below. Quantity of beef (lb.) 0 1 2 3 4 Total revenue ($) Total cost ($) 0 4 (A) 1 pound (B) 2 pounds (C) 3 pounds (D) 4 pounds 6 12 18 24 6 10 15 21 What is the profit-maximizing (or loss minimizing) quantity? Profit ($) Marginal revenue ($) Marginal cost ($) Marginal profit ($)arrow_forward
- you are an accountant for a manufacterer of radios. the demand function for the tablets is p= 40-4x2 where x is the number of tablets produced in millions. it costs the company $15 to make a tablet. write an equation for the manufactures profit as a function of the number of tablets produced. the company currently produces 1 million tablets and makes a profit of $21000000, but you would like to scale up production a bit, what greater number of tablets could the company produce to yield the same profitarrow_forwardIn 2019, a ski resort increased the prices it charged for one-day ski passes and season passes. If someone buys a season pass, he can ski as many days as he wishes. The table below provides information on the prices and the number of passes sold in 2018 and 2019. Type of Pass One day Season Price in 2018 x 34000 $60 $1,200 Number of Passes Sold in 2018 5,000 250 Price in 2019 $80 $1,400 Given the information in the table, we know that the revenue earned from selling day passes changed by $ 52000 , and the revenue earned from selling season passes changed by $ Number of Passes Sold in 2019 3,100 190 From the answers to Part 1, we know that the demand for day passes is elastic demand for season passes is inelastic and thearrow_forwardAn exclusive Yoghurt manufacturer sells 4,000 gallons per month at a price of GHS 40 each. When the price is reduced to GHS 30 sales increase to 6,000 gallons per month. Calculate the change in revenue due to the change in price.arrow_forward
- A local newspaper currently has 84,000 subscribers at a quarterly charge of $30.Market research has suggested that if the owners raise the price to $32, they wouldlose 5,000 subscribers. Assuming that subscriptions are linearly related to theprice, what price should the newspaper charge for a quarterly subscription tomaximize their revenue?a) Find the cost function (Hint: find slope and use point-slope form to find thecost function) b) Find the revenue function c) Find the maximum revenue d) Find the profit functionarrow_forwardOn average, the price of a patented pharmaceutical drops between 30 and 50 percent after the patent expires. Explain why this occurs. (Do not use AI).arrow_forwardHarriet McNeil, proprietor of McNeil's Auto Mall, believes that it is good business for her automobile dealership to have more customers on the lot than can be served, as she believes this creates an impression that demand for the automobiles on her lot is high. However, she also understands that if there are far more customers on the lot than can be served by her salespeople, her dealership may lose sales to customers who become frustrated and leave without making a purchase. Ms. McNeil is primarily concerned about the staffing of salespeople on her lot on Saturday mornings (8:00 a.m. to noon), which are the busiest time of the week for McNeil's Auto Mall. On Saturday mornings, an average of 6.8 customers arrive per hour. The customers arrive randomly at a constant rate throughout the morning, and a salesperson spends an average of one hour with a customer. Ms. McNeil's experience has led her to conclude that if there are two more customers on her lot than can be served at any time…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning