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Your friend invests and patents a portable ice cream carrier (PCC) which you plan to manufacture as well. You determine the demand function for the product is
Q = 120 - 3P while the cost is TC = 2Q
a. what are your profit maximizing price and quantity for this product? what profits will you make?
Suppose your market research leads you to conclude that there are two distinct groups of consumers interested in the PCC, restaurants and homes. You determine that each has a different demand curve as follows
Qrest = 70 - 2P
Qhome = 50 - P
You can easily distinguish between the two by the fact that restaurants have licenses to sell food while homes do not. And because the PCC is adjusted to the average quantity of ice cream being carried by that particular consumer (this is done at the time of the sale) resale is no possible. You decide that this is a great opportunity to engage in 3rd degree price discrimination (charge each group a different price)
b. what price will you charge resaurants and what price will you charge homes? how many PCC's will you sell to each?
Assume the market for Florida oranges is in equilibrium. Demand is represented by Qd = 60 - 2P Supply is represented by Qs = 10 + 3P where the quantity is in thousands of pounds.
The elasticity of ticket sales with respect to the size of the local population is estimated to be about 0.7. Briefly explain what this number means. If the local population increases from 60,000 to 61,500,
a perfectly competitive market is in long run equilibrium. at present there are 100 identical firms each producing 5000 units of outputs. the prevailing market pricde is $20. assume that each firm faces increasing marginal cost .now suppose there ..
Vipsana's Gyro House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a rent of $20 per day. Answer questions 17-10 accordingly.
In each case, draw a budget line that shows her available choices, and indicate her best choice by adding indifference curves. Assume that Jane only cares about the number of peanuts, and not about the size of the bag.
Use these prices to calculate the marginal value product of fertilizer and its cost. You can do this somewhat crudely based on the table of numbers that you compiled above, or you can do something fancier using the equations that Excel fitted to t..
Consider the following payoff matrix in which the numbers indicate the profit in millions of dollars for a duopoly based either on a high-price or a low-price strategy. Firm A High-price Low-price What will be the result when Firm A chooses a low-..
Two companies, Perfect Lawn CO. and Ideal Grass Co. are competing in the manufacture and sale of lawn mowers. Perfect has a somewhat older plant and requires a variable cost of $150 per lawn mower; its fixed cost are $200,000 per year.
Suppose the government imposes a 25-percent tax on accounting profits. This tax is only levied if a firm is earning positive accounting profits. What will your after-tax accounting profit be in the low-revenue case In the high-revenue case.
A $40,000 machine will be purchased by a company whose interest rate is 12%. The installation cost is $5K, and the removal costs are insignificant. What is its economic life if its salvage values and O&M costs are
Agri-Beef Inc. operates cattle feed lots in several midwestern states. The company wishes to estimate the average daily weight gain of cattle on their lots. To do this a simple random sample of cattle is taken and the daily weight gain is recorde..
Suppose the price of widgets falls from $7 to $5 and consumption of widgets rises from 15 widgets a month to 25. Calculate your price elasticity of demand of widgets. What can one say about the price elasticity of demand of widgets
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