What can you infer regarding the own price elasticity

Reference no: EM1328267

Question about Economics: Demand curve, supply curve etc

1. Xerox Corporation develops, manufacturers, and services document equipment and software solutions worldwide. Assume the company offered $75 off the $1,475 regular price on the Phaser 6360, a durable high-speed color copier, and Internet sales jumped from 700 units to 800 units per week.

A. Estimate the color copier demand curve, assuming that it is linear.

B. If marginal costs per unit are $650, calculate the profit-maximizing price-output combination.

2. The demand curve for a product is given by Qx = 1,000 - 2(Px) + .02(Pz), where Pz = $400.

A. What is the own price elasticity of demand when Px = $154? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price below $154?

B. What is the own price elasticity of demand when Px = $354? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above $354?

C. What is the cross-price elasticity of demand between good X and good Z when Px = $154? Are goods X and Z substitutes or complements?

3. Suppose the own price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -6. Determine how much consumption of this good will change if:

A. The price of good X increases by 5 percent.

B. The price of good Y increases by 10 percent.

C. Advertising decreases by 2 percent.

D. Income falls by 3 percent.

4. For the first time in two years, Big G raised cereal prices by 2 percent. If the volume of cereal sold by Big G dropped by 3 percent, what can you infer about the own price elasticity of demand for Big G cereal?

5. This year was prosperous for Starbucks Coffee. Revenues increased 9 percent. Suppose management attributes this revenue growth to a 5 percent increase in the quantity of coffee sold. If Starbucks' marketing department estimates the income elasticity of demand for its coffee to be 1.75, how will looming fears of a recession (expected to decrease consumers' incomes by 4 percent) impact the quantity of coffee ]Starbucks expects to sell?

Reference no: EM1328267

Questions Cloud

Write about a fictional company : Command And Control Mechanism for Operational Feedback - Write about a fictional company my team has created that is looking to import Blue Jeans into Ecuador.

Compare and contrast economic order quantity and jit : Compare and contrast Economic Order Quantity and Just-In-Time as inventory control methods.

Explain assess the past and current and future customer : Explain Assess the past and current and future customer use of internet and select a particular market sector and assess the past

Explain the concept of “business ethics” : Explain the concept of “business ethics”. Critically discuss the term “complex ethical dilemma”. Reviewing the real life situations mentioned in the document Complete Guide to Ethics Management:

What can you infer regarding the own price elasticity : Illustratr what can you infer regarding the own price elasticity of demand for Big G cereal.

How could one improve such protocol : Considering the performance of a communincation protocol design, how may the number of messages have potentially the largerst impact as compared to the total amount of data.

Response on the best leader for respective roles : Write a response on the best leader you ever worked with: Describe your respective roles and the context in which you interacted?

Parol evidence rule and ethics : Answer the following question in a manner that is clear and concise. Write so that the lay person can understand your answer.

Purposes of capacity planning : Identify how your company uses forecasting for purposes of capacity planning.

User Account

All Pages