Is janice using marginal cost and marginal revenue correctly

Assignment Help Macroeconomics

Reference no: EM131174782

21st Century Liquors - QUESTIONS

Assume that you are Janice Wilton and you have been asked to elaborate on the memo in Exhibit 1 to address the issues raised by Ted Radcliff in both of his conversations with you. Use the report form from the course website and please be certain to address all of the following issues:

Q. 1. What conditions would justify the assumption of a constant contribution margin per customer? Do you think those conditions are likely to hold here? To support your conclusions, do a scatter plot of the sample data, and then use the sample data to run a regression of purchase costs (dependent variable) on purchase revenues (independent variable). [Hint: What is the meaning of the intercept term of your regression results?]

Q. 2. Is there good reason to believe that evening customers purchase, on average, more than day customers? Support your answer by performing a statistical test on the difference between the mean day purchase and the mean evening purchase.

Q. 3. Is Janice using marginal cost and marginal revenue correctly in her analysis? Explain the errors in her analysis, if any. [Hint: Think about Ted Radcliff's questions.]

Attachment:- 21st-Century-Liquors-Case.rar

Reference no: EM131174782

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