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Income elastic
Market Researchers at the Lawrence Company estimate that the demand function for a product is
Q = 75 P-2 I-2
Q is quantity demanded, P is Price, and I is Income.
Marginal cost is estimated to be $15.
a. They have their product priced at $30. Is this optimal? Why or why not.
b. What would you recommend their optimal price to be?
c. How would you classify the product in terms of it's income elasticity?
What is the business cycle and how is it linked to a secular trend? Describe each of the four phases of the business cycle and indicate how they a linked to the concepts of a "boom", a "recession" and an "expansion".
Income at a major cellular telephone manufacturer when it decreased the average selling price of its phones.
Calculate the cross-price elasticity for the following goods. Are they complements or substitutes?
If salary in the private organization are set equal to the value of the marginal product, how much will they rise yearly.
In Bayonne, New Jersey, there is a large beauty salon and a number of smaller ones. The total demand function for hair styling per day is Q=180-10P, where P is in dollars.
Describe the effects a 15 percent price increase would have on the demand for the product.
Maggie's utility function is and her income is $5000. Then her MRS at generic bundle (x1, x2) is 50-0.25x1. Commodity 2 is a composite good, and hence its price is unity.
Illustrate the notion that people are rational respond to incentives consider an experiment conducted by researchers at St. Luke's Roosevelt Hospital in New York City.
Allan Sports sells snowmobiles in a Northern Suburb of the Twin Cities. For the third year in a row sales have been dismal.
Explain how to describe price elasticity of demand. What are the factors that affect price elasticity of demand.
A firm has offices in London and New York. Fractional units of labor can be employed in each location (as part-timers can be hired) and the headquarters could be in either city.
In an article about the financial problems of USA Today, Newsweek, reported that the paper was losing about $20 million a year.
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