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Advertising & elasticity
How would you explain the following?
KinderCare operates the only daycare center in an exclusive neighborhood and they are making a large economic profit. The owners believe that new daycares will soon learn of this highly profitable market & try to enter the market so they decide to begin spending immediately a large amount of money on advertising designed to decrease elasticity. Do you believe the owners should wait until these new daycares actually enter? Why or why not? How could the advertising be employed to allow KinderCare to keep price above average cost without encouraging the entry?
Provide each of the subsiquent price elasticities, determine whether marginal revenue is positive, negative, or zero.
Suppose you decide to withdraw $100 in currency from your checking account. What is the effect on M1? Ignore any actions the bank might take as a result of the withdrawal.
How many "spells" of unemployment occur each year in this economy? What percentage of the "spells" are only one month long?
Explain why this strategy may in fact, be rational Also, identify at least two other strategies that might permit Argyle to earn higher profits.
Compute the price elasticity of demand.
Illustrate what is the estimated elasticity of demand for new brand cars with respect to the price of gasoline.
Find out the range of outputs over which the firm's technology exhibits Increasing, Decreasing or Constant Returns to Scale.
Compute the expected value (revenue) from each project. Compute the coefficient of variation of each project, and find out which project should the company choose. Compute the variance and standard deviation of expected value from each project.
Suppose that there is an "inflation scare," that is, suppose market participants increase their expectations of future inflation.
Pam, having recently graduated from college, is looking to work for 2 years before she enters graduate school. She has received 2 job offers with the following salary structures:
As a manager of chain of movie theatres which are monopolies in their respective markets-Devise a pricing strategy to maximize your firm's profits.
Explain why dose not raise in aggreate demand translate into an increase in real GDP.
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