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After you complete your MBA you decide to open a business, named DirectDelivery. DirectDelivery is a courier service in Austin, TX which delivers packages within Austin city limits within half a day, door to door. The packages are delivered by taxi drivers, and customers are mainly law firms who want fast, secure delivery of important documents. Normally each delivery charge is $15.00 And the average number of deliveries per month is 6,000 But DirectDelivery would like to increase its volume, so this month it cut the price to $12.00 With the price cut, the number of deliveries increased to 7,000 Questions 1. What is DirectDelivery's elasticity of demand? 2. Is demand elastic, inelastic, or neither? 3. What does elastic, inelastic, or neither tell us about the elasticity of demand? 4. Why does this matter? 5. Have DirectDelivery's profits increased or decreased as a result of the price cut? 6. By how much? 7. Was the price cut a success or failure? 8. What price should DirectDelivery charge next month? $12.00 or $15.009. Why?
What is the monopolist's profit maximizing level of output? What price will the profit maximizing monopolist charge?
You're the manager of monopolistically competitive firm. The present demand curve you face is P=100-4Q. Your cost function is C(Q)=50+8.5Q2 (That's Q squared).
A monopolist sells in two geographically divided markets, the East and West. Marginal cost is constant at $50 in both markets. Demand and marginal revenue in each and every market are as follows:
A monopolist knows that in order to expand the quantity of output it produces from 8 to 9 units that it must lower the price of its output from $2 to $1. Calculate the quantity effect and the price effect
questiontheneoclassicalgrowththeoryisbasedontheexistenceofanaggregateproductionfunctionshowingtherelationship between
Write about the problem or issue as if you are explaining it to someone who has never taken an economics class.
Monopolies are price makers and as such should be able to set price where they will make a profit. Is this statement true? Why or why not?
Compute their TR, MR, ATC, MC and profit/loss schedules and find out the equilibrium price, equilibrium output, unit profit, and total profit at the equilibrium point for these ingenious entrepreneurs.
Consider the following graph of a monopolistically competitive firm selling DVDs. A. How many DVDs should be sold to rent per day to maximize profit. B. What is the economic profit for this firm operating where economic profit is maximized.
create a demand schedule and a supply schedule for your product.using these schedules draw a demand curve and a supply
The economists also argued that the technical level of potential output had risen. Show their argument using the AS/AD model.
1.discuss the role that discounting plays in a dynamically efficient allocation of non-renewable resource use through
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