Is there anything wrong with this reasoning

Assignment Help Econometrics
Reference no: EM131222799

Critical Thinking: Let's say your company sells units of salt for $1.00 and wants to increase its revenue by raising the price to $1.20 per unit. We know, from the table on page 94, the price elasticity of demand for salt is 0.1. A member of marketing says that means if we raise price 20%, we will see a 2% reduction in sales. Is there anything wrong with this reasoning? Discuss what is right and wrong with this conclusion.

Reference no: EM131222799

Questions Cloud

Kink in the budget constraint : Draw the budget constraint where chocolate bars are on the vertical axis and ice-cream cones are on the horizontal axis. Clearly indicate at what quantities will there be a kink in the budget constraint
Calculate the manufacturing overhead costs incurred : The following information relates Nickel Company for 2015: Calculate the manufacturing overhead costs incurred during 2015
Write an essay about the effects of an environmental problem : Write an essay about The effects of an environmental problem. At least four sources must be acquired through the databases subscribed to by UMUC's Information and Library Services.
Derive an equation for the budget constraint : Suppose that Tiffany has an income of $20 per week and she spends it on frozen pizza (P) and beer (B).The price of a bottle of beer (PB) is $1 and the price of frozen pizza (Pp) is $5 per pizza. (a) Derive an equation for the budget constraint.
Is there anything wrong with this reasoning : Is there anything wrong with this reasoning? Discuss what is right and wrong with this conclusion.
Describe what was the hypothesis or hypotheses being studied : Identify and describe what research method(s) was used - observations in a lab, natural observations, surveys, case study, correlational study, experiment etc.?
Analysis of the current market conditions : You have been given the responsibility of working with your organization's CEO to do a competitive market analysis of the potential success of one of their existing products. Select your organization and a product produced by that organization fro..
Trade or business expense : Which of the following is not a "trade or business" expense? Cole purchased a car for business and personal use. In 2014, he used the car 60% for business (13,000 total use miles) and used the standard mileage rate to calculate his vehicle expenses. ..
Absolute advantage in food production : 1. Which country has an absolute advantage in car production? Which country has an absolute advantage in food production? 2. For the American worker, what is their opportunity cost for producing food? What is their opportunity cost for producing ca..

Reviews

Write a Review

Econometrics Questions & Answers

  What will gradually happen to the value of the dollar

Suppose that economists have made the following projections for the coming year Exports $540B, imports $710B, capital outflow $320, capital inflow $420. As the year is unfolding, it turns out that these projections are proving to be quite accurate

  Can the optimal allocation be reached by trade

At any point in time, what are the feasible consumption allocations between the young and the old consumers who are alive at that point? Given the preferences, which allocation is optimal?

  Should gail dribble buy petscan shares or not

Gail Dribble is analyzing the shares of Petscan Radiology. Petscan's stock pays a dividend once each year and it just distributed this year's $0.85 dividend. The market price of the stock is $12.14. Gail estimates that Petscan will increase it div..

  Determine the sample size for the estimate of the population

determine the sample size for the estimate of the population

  Calculate the optimal number of machines for the lowest cost

The machining time per piece if 0.164 h, and the machine loading time is 0.038h. With an operator rate of $12.80/h and a machine rate of $14/h, calculate the optimal number of machines for the lowest cost per unit of output.

  How much did prices rise during the civil war

Wartimes are usually associated with inflation. According to the Inflation Calculator at www.bls.gov/cpi/home.htm, what would $100 in 1860 be worth in 1865? By how much did prices rise during the Civil War?

  Calculate the balance bu of a finite time series

Neglecting inflation, find the balance of this time series at 1981, 1993 and 1999 if the quarterly discrete interest rate is ig=0.06. Also develop a flow chart for a subroutine calculating the balance Bu of a finite time series

  What value would you predict for s

The forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned ride snowmobiles. The model specifies that the S vary jointly with disposable personal income Y and the population between ages 15 and 40,..

  Determine at what price level the total revenue be maximum

The weekly demand and supply functions for seats on flights between Syracuse and Boston have been estimated as follows: Qd = 1600 - 2.5 Price + .040 Income - 4 Weather + 1.20 Pa ( where Pa is the price of alternative means of travel )

  N why the bidders changed their minds toward wanting to bid

How do these experiments explain why England wanted to tax trade in the American colonies; which led to rebellion and the formation of the United States

  Determine how will the growth in gdp change

Suppose GM reduces all of its existing workers from a 50 hour work week to a 40 hour work week but does not lay anyone off or hire anyone new. How will the unemployment rate change as a result How will the growth in GDP change

  The expression of the change in a products quantity

Show that the expression of the change in a product's currentequilibrium quantitty due to a unit change in the product'sexpected future price is: dQ = (SpDpe - DpSpe)dP / (Sp-Dp) where Sp and Dp are partialderivatives with respect to current price

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd