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You are asked to help in setting the subscription rates of a monthly magazine. As expected, the major component of cost is fixed or sunk; so we ignore it in what follows. Variable cost including printing, shipping, and mailing comes to $30 per year per subscriber. The publisher has an extensive data set suggesting that annual magazine subscription demand is: D = 100 - p. Here p is the price of an annual subscription.
SHOW ALL EXCEL FORMULAS AND INPUTS FOR SOLVER (QUESTION #3)
1) If the publisher sets p = 47 what will her profit be?
2) Write down an algebraic expression for total profit to the publisher as a function of p.
3) Use SOLVER to compute the profit maximizing choice of p.
4) Suppose the magazine has another source of revenue: advertising. Consumers do not care about the amount of advertising contained in each issue, but advertisers care about the number of subscribers. For every subscription purchased, the magazine gets $20 in advertising revenue. Taking into account the revenue from advertising, should the publisher lower or raise its annual subscription price p? What should the new profit maximizing level of p be?
If a recessionary gap were to appear, how might the economy adjust? Can/should we rely on it to adjust itself? Is it possible that the economy will never adjust to a gap, and things will just get worse and worse?
a company has two million shares outstanding. it paid a dividend of 2 during the past year and expects that dividends
The Theory of the Firm document, the Friedman article, and the information in chapter 4 argue that the main goal of a firm in a market economy is to maximize profit (shareholder wealth) over the long term. However, SEC regulations require U.S. corpor..
What is the cross-price elasticity of demand for Delta flights with respect to the price of Southwest flights - what is the market level price elasticity of demand for air travel between Chicago and Dulles when both airlines charge $300.
How do providers influence the decisions that patients make? What type of decisions do patients make as a natural consequence of the influence from providers and physicians?
Suppose the person lives for two periods, U = u(c1) + bu(c2), and can acquire an asset at price q, with c1 = w1 – qa and c2 = (d + q*)a + w2, where d = dividend and q* = selling price.
For Karr Company, the predetermined overhead rate is 140% of direct labor cost. During the month, Karr incurred $90,000 of factory labor costs, of which $80,000 is direct labor and $10,000 is indirect labor. Actual overhead incurred was $119,000.
Compute the Average cost, Marginal cost, Average Variable Cost and the output level at which Average Variable Cost is at a minimum.
If the market-clearing price is 6, obtain the profit maximising level of output.
Determine what fiscal policy measure has a more direct impact to the economy, an increase in government spending or an equal decrease in taxes if consumer confidence is lower than the previous month.
Reliance on finite supplies of foreign oil and on coal fired electric power plants causes ever increasing prices that we must pay for the oil and the deleterious effects on our environment from both as sources of greenhouse gasses
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