Managerial Economics
5th Edition
ISBN: 9781337681599
Author: Luke M. Froeb; Brian T. McCann; Michael R. Ward
Publisher: Cengage Limited
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Chapter 9, Problem 9.1IP
To determine
The long-run effect of the proposal.
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Exercise 4.6
An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 – 0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by QO = 10 – 0.1P. The marginal cost and the average total cost per item are equal to €20.
a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically.
b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game. How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you…
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Consider the following data: equilibrium price is 9.50, the quantity of output produced is1,000 units, the average total cost is 8, and the average variable cost is 6. Given this, the total revenue is
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On the occasion of summer vacation, a student plans to open a milk tea shop. Before deciding to open a store, she wants to find out how profits fluctuate with fluctuations in selling prices and costs per unit of product. The selling price per cup of milk tea can range from VND 20,000.00 to VND 30,000.00 (the level of change is VND 1,000.00 each time) and the cost to make a cup of milk tea can range from VND 13,000.00 to VND 17,000.00 (the level of change is VND 500 each time). Knowing that the initial fixed cost is VND 24,000,000.00 and the number of cups of milk tea sold (Demand) depends on the selling price according to the formula:
Demand = 24000 - 0.5 * Unit Price
Use the two-dimensional sensitivity analysis to answer the following questions:
a) What is the profit if the selling price is 23,000.00 VND and the cost per unit is 15,000.00 VND?
b) How will profit change with each increase in cost of a product unit by VND 500.00 with a constant selling price of VND 25,000.00?
c) What is…
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