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Suppose you are the Marketing Manager for Dr. Pepper. Let's assume that each year you sell 6 billion cans of Dr. Pepper at the price of $0.499. The long-run average gross cost of a serving is constant and is equal to $0.40 per can. Your supervisor calls you and assigns a project if it makes economic sense of running additional advertising during the World Series game between the Texas Rangers and L.A. Dodgers.
a. You determine that running the 30-second advertisement will raise the price consumers are willing to pay for the initial 6 billion servings by $0.001 (1/10 of a cent) per can. You also determine that the advertisement will allow you to sell 1 million more servings at a new price of $0.50 per serving. The price of a 30-second Super Bowl commercial is $5 million. Should you buy the advertisement?
In our study of intertemporal utility maximization, everything (initial and ending wealth, interest rate, and consumption) in the budget constraint is expressed in real terms. Reformulate the budget constraint in nominal terms and show that for a two..
In a local shoe factory, machinery used is outdated and takes too much labor time to make a pair of shoes. Inexpensive imports are flooding the market and it is increasingly hard to compete with imported shoes on price. Briefly discuss steps the mana..
A monopolist facing different demand curves in two separate markets maximizes profit by: A monopolist that is able to perfectly price discriminate will end up producing a level of output:
Use a supply-demand graph to demonstrate how the quantity and price of medical services are expected to be affected if we went from a world without insurance to a world where the government covered 90% of all medical costs.
What other potential sources of financing for Jacquii LLC do you recommend Rosshandler explore? Explain.
Three college students are considering operating a tutoring business in economics. This business would require that they give up their current jobs at the student recreation center, which pay $6,000 per year. A fully equipped facility can be leased a..
Some large hardware stores, such as Home Depot, boast of carrying as many as 20,000 different products in each store.
If the price of a product in a country decreases, what can we expect to happen to the resources that are used to produce that product?
If mortgage rates rise from 5% to 10% but the expected rate of increase in housing prices rises from 2% to 9% , are people more or less to buy houses. IRs was lower in the mid-1980s than in the late 1970s, yet many economists have commented that real..
What business organizational format (Limited Partnership, a Limited Liability Company, or a Corporation) was chosen and WHY? (reasons why you chose the particular format i.e. no double taxation, etc.)
You work for a hotel chain that is considering expanding into international markets and you are looking for the right person to help oversee that process. You identify a top employee at another firm who seems to have exactly the skill set needed to h..
ABC, Inc., is considering purchase of a new equipment. The expected sales are expected to be $5,535,496. The annual cash operating expenses are expected to be $3,877,056. The annual depreciation is estimated to be $567,967 and the interest expense..
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