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A soft drink bottler collected monthly data on its sales of 12 ounce cans at different prices. a. Use Excel chart wizard to produce a scatter plot for price and quantity. Do you visually detect linear or non-linear relation? b. Run a simple linear regression: Q = a + bP c. If price is cut by $.10, by how much will the volume of sales increase? d. What is the price elasticity of demand at price of 55 cents? Note: You need to use regression result from part b. e. Use the exponential function model Q = aPb to estimate the demand? Does this equation fit the data better than the linear equation in part b? Explain. Make sure that you make a reference to R square, P-value and F statistics. f. What is the price elasticity of demand from the exponential model? Table 2 - Soft Drink Months Quantity Price 1 98 0.45 2 80 0.50 3 95 0.45 4 123 0.40 5 163 0.35 6 168 0.35 7 82 0.50 8 68 0.55 9 96 0.45 10 77 0.50 11 130 0.40 12 125 0.40
Returning to the duopoly of part (b),suppose Firm 1 abides by the agreement but Firm 2 cheats by increasing production. How many widgets will Firm 2 produce? What will be each firm"s profits?
The chain store paradox of an incumbent who accommodates a finite stream of potential entrants threatening to enter sequentially numerous markets illustrates
Give an example of a decision that is rational ex-ante but irrational ex-post. Under what conditions will this ratonality be different and under what conditions will the rationality (ex-ante and ex-post) be the same?
Why do Movie theatres, airlines, and many other businesses like to charge customers dissimilar prices based on time of the day, age, and purchase dates? Provide an example of a price discrimination for a good or service that you thought it to unfair...
Suppose a bar's constant marginal cost per beer is $3.60 and it was making 40 cents per beer in variable profit without the tax. What is the profit per beer with the tax? Intuitively, why has the bar's profit fallen by more - in percentage term..
discuss how the distribution of income among various groups of income earners have changed in this country during the
Assume your elasticity of demand for your parking lot spaces is -.05, and price is $20/day. If your MC is zero, and your capacity at 9 a.m. is 96% full over the last month, are you optimizing?
suppose the chairman and chief executive officer of general motors has decided to a raise the companys auto prices by
If countries can benefit with increasing their consumption possibilities through trade, why do so many countries place restrictions on trade?
assuming that the fed judges inflation to be the most significant problem in the economy and that it wishes to employ all of its policy instruments except intrest on reserves, what should the fed do with its three policies.
Calculate John's optimal consumption bundle, (X, Y). (Hint: Since John's indif-ference curves are not smooth and \curvy", we cannot use MRS = MRT to solve for the optimal bundle. Draw a diagram to see where the John's optimal bundle must be on his ..
business behavior and public policy1. define market power and then discuss the rationale for government regulation of
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