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You have taken a job as pricing manager for a very fine men’s clothing line that sells high-end, tailored shirts, suits, etc. The firm is interested in increasing its revenues. Because it is a “high-end” clothier your boss does not what to have a “sale” on shirts or sweaters; he would actually rather increase the prices on either the firm’s tailored shirts or the firm’s hand-knit sweaters. Because you are taking MBA674 at Park University you know that, depending on the elasticity of demand, it is possible to increase the prices for shirts or sweaters, sell fewer units but actually increase your revenues. The last time you increased the prices on your shirts and sweaters the shirts went from $300 each to $320 each and the sweaters went from $400 each to $430 each. The corresponding change in demand was: Shirts dropped from an average sales of 260 a month to 242, while sweaters dropped from an average sales of 200 a month to 188. Using the formulas found in Thomas and Maurice, calculate the price elasticity of demand for shirts and sweaters. Show me your calculations. Which one, shirts or sweaters, has a demand elasticity that will allow you to increase the price, sell fewer units BUT still increase your revenues? Take the one you have chosen, shirts or sweaters, and increase the price 10% from the current price (the current price is $320 for shirts and $430 for sweaters) and show the new quantity demanded at that price as we did in class. Also, show that the new total revenue will be greater than then old total revenue.
Robbie Trencheny, an eighteen year old high school senior, loaded half a dozen textbooks and novels into his Nook digital reading equipment as soon as he received it as a birth day present from his parents this month.
At his current consumption basket, his marginal utility for hot dogs is 5 and his marginal utility for sodas is 3.
Suppose you were provided a gift of a gold mine that generates $1,000 of net income every year, indefinitely. And suppose equilibrium rate of interest is 5 percent. Illustrate what is present value of that gold mine.
Explain how does the price elasticity of demand for corn oil influence the quantity-demanded of corn oil and the Total Revenue earned by sellers of corn oil
Illustrate what is happening to the U.S. exchange rate when the U.S. nominal exchange rate is unchanged, but prices rise faster abroad in the United States than abroad.
Assume you are part of a research team evaluating a proposal to clean up a dangerous squander site.
Who sells permits and Explain how many do y sell. Who buys permits and Explain how many do y buy. Briefly explain why sellers and buyers are each willing to do so. Illustrate what is total cost of pollution reduction in this situation.
Compute the point elasticity of demand at this TR-maximizing price also quantity. Does the elasticity have the expected value.
Suppose population growth rate is 0.03, inome elastiity of demand for consumption is 0.75 and inome growth rate of 0.05. what would be the growth rate of agriultural production for balaned growth of the economy.
Rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve.
If extension of provisions is made to final goods but not to intermediate goods, what would this do to effective rate of protection (ERP) for country provided by its tariff schedule.
the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500. What is the average total cost.
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