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Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity demanded to 450 per day.
a. Compute the price elasticity of demand between these two points.
b. Would you expect total revenues to rise or fall? Explain.
c. Suppose you have reduced the average price of a meal to $18 and are considering a further reduction to $16. Another survey shows that the quantity demanded of meals will increase from 450 to 500 per day. Compute the price elasticity of demand between these two points.
d. Would you expect total revenue to rise or fall as a result of this second price reduction? Explain.
Assume that your favourite candidate is proposing a 15 percent flat tax to replace our personal income tax. Analyze the tax and tell whether it is a good tax alternative or not. What are the strengths and weaknesses of the tax?
Elucidate how the factors determining resource demand differ from those determining product demand. Explain the meaning and significance of the fact that the demand for a resource is a derived demand. Why do resource demand curve slope downward.
q.suppose a factory can produce a shirt for the equivalent cost of 2 loaves of bread and a household can produce a
What would happen to unit sales and total revenue of the book store sold a textbook at a lower price? Would this be elastic due to the fact that a college textbook would be a necessity versus a luxury? Also, if that is the case.. Can you please expla..
If taxes were cut by $1.5 trillion and the MPC was 0.85, by how much would total spending
the set of efficient trades these individuals would rationally make. One of the points on the set of efficient trades you illustrated in your diagram will be a competitive equilibrium.
Incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.
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Jack sees commuting by bus and train as perfect substitutes (U = B + T), that is, he would exchange one commute by bus for one commute by train. The price of a bus ticket is $1.50 and the price of a train ticket is $ 2.00. Jack has $6.00 to spend on ..
Metro claims that at the time of its loan it was unaware of HFCs interest. Between these parties, who has priority to the collateral? Discuss your answer.
You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is -6, while group 2’s is -4. Your marginal cost of producing the product is $50. Determine your optim..
A high pressure pump at a methane gas (bio fuel) plant in Memphis costs $29000 for installation and has an estimated life of 12 years. By the addition of a specialized piece of auxiliary equipment, The maximum expenditure for the auxiliary equipment ..
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