Derive an expression for the (inverse) demand curve

Reference no: EM13175120

1. Roshima is researching universities where she could study for her MBA degree. She is considering 3 major attributes that she considers important in her choice: ranking, price, and location. The value she places on each attribute, however, differs according to whether she remains full-time employed during her studies or quits her job and focuses on her degree. If she continues to work full time and takes all her courses online, then ranking is the most important attribute, twice as important as price and three times as important as location. If she quits her job and attends school full time, then location becomes three times as important as ranking and twice as important as price. She is considering two universities, respectively, the MBA program at Arizona State University (ASU) and the MBA program at University of Phoenix (UOP), both of which are priced at approximately $25,000. She has rated each attribute on a scale of 1 to 100 for each of the two schools.

Attribute

ASU

UOP

Ranking

Location

Price

a. Which of the two options should Roshima pursue of she wants to keep her full-time job? (Calculate the total expected utility from each school option and compare. Graph is not required)

b. Which of the two options should she pick if she plans to quit her job and dedicate to her studies?
c. Which option should she pursue if the probability of being laid off and unable to find a new job is estimated as 0.6? ???9 your calculations and explain your reasoning.

2. The demand function for Einstein Bagels has been estimated as follows:
Qx = -15.87 - 40.73Px + 84.17Py + 0.55Ax

where Qx represents thousands of bagels; Px is the price per bagel; Py is the average price per bagel of other brands of bagels; and Ax represents thousands of dollars spent advertising Einstein Bagels. The current values of the independent variables are Ax=216, Px=0.85, and Py=0.79.

a. Calculate the price elasticity of demand for Einstein's Bagels and explain what it means.

b. Derive an expression for the (inverse) demand curve for Einsteins's Bagels.

c. If the cost of producing Einstein's Bagels is constant at $0.10 per bagel, should they reduce price and thereafter, sell more bagels (assume profit maximization is the company's goal)?
d. Should Einstein Bagels spend more on advertising?

Reference no: EM13175120

Questions Cloud

Methods by which governing bodies communicate the standards : Methods by which the governing bodies communicate the standards, requirements, and guidelines for the accounting profession

State electromagnetic radiation with a wavelength : Electromagnetic radiation with a wavelength of 665 nm appears as orange light to the human eye. The energy of one photon of this light

Which compound has the smallest molar mass : Which compound has the smallest molar mass?

Calculate delta g foor the combustion of ethane : calculate delta G foor the combustion of ethane: 2C2H6(g) + 7O2(g) = 4CO2(g) + 6H2O(l)

Derive an expression for the (inverse) demand curve : Calculate the price elasticity of demand for Einstein's Bagels and explain what it means. Derive an expression for the (inverse) demand curve for Einsteins's Bagels.

How many millimoles of hno3 are needed to react completely : how many millimoles of HNO3 are needed to react completely with a .2800 gram piece of copper wire.

Explain a rate equation to work : How do you calculate H2 volume needed when you are given power output required is 1kW, V .78, run for .6 hours? I only have a rate equation to work

What is the new pressure of the gas : An ideal gas is contained in a cylinder with a volume of 5.0 102 mL at a temperature of 30°C and a pressure of 720. torr. The gas is then compressed to a volume of 25 mL, and the temperature is raised to 794.°C. What is the new pressure of the gas..

User Account

All Pages