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Question A Soapy Soap Company is a highly successful in various urban and rural markets within the U.S. It sells various types of bath soaps through large and small retailers. However, given market maturity and other factors, the company has seen only stagnant growth over the last decade. The CEO of the company is now interested in pursuing opportunities in China given its large market size (about 1.4 billion consumers and thus, potential users of soap). The company sells it soaps at an average price of $0.50 to various wholesalers who in turn sell to retailers and thus, to consumers. On the average, a consumer in the domestic market pays $1 for a bar of soap. In China, however, the company would have to go through an importer. Beyond the importer the distribution chain would consist of distributors, wholesalers, semi-wholesalers and then retailers, before the product reaches the consumer. Also, the costs of transportation and importation (e.g., duties) are to be included in the price at which the product is sold to the importer. The relevant costs and markups (in percentages) are: Costs of Transportation and Importation 10%Importer Markup 5%Distributor Markup 5%Wholesaler Markup 5%Semi-wholesaler Markup 10%Retailer Markup 50% 1. What would be the average retail price of the soap in China?
2. Given the various modes of international market entry, which mode would be most appropriate for this company? Elaborate. [Hint: The average price of the product after transportation and importation is $0.55. Since the importer's markup is 5%, the product is sold to the distributor at $0.58 ($0.55 x 1.05). Similar calculations can be made down the chain.]
a) What is the market demand function for total X (= X1+X2) as a function of PX; I1; I2; and PY. b) Graph the two individual demand curves (with X on the horizontal axis, PX on the vertical axis) for the case I1 = 1000, I2 = 1000; and PY = 10.
Pay scales of federal government employees are determined according to each employee's government serve (GS) rating. GS-10 experienced accountants with the Government Accounting Office (GAO) were reported to earn salaries that are approximately no..
Kim deposits her annual bonus into a saving account that pays 8% interest compounded annually. The size of her bonus increases by $2,000 each year, and the initial bonus amount is $5,000.
(Amounts on the balance sheet are in millions of dollars.) Assets - Reserves $15.90 Loans $150.00 Securities $34.10 Total - $200.00 Liabilities + Capital - Transactions deposits $180.00 Equity capital $20.00 Total - $200.0 Calculate the bank's exc..
a. Warner is selling in a perfectly competitive market at a price of $40. What is the profit maximizing or loss-minimizing output b. Calculate the firm's profit or loss. Show computation. c. Should the firm continue to produce in the short run
Finally-and this is a stretch question-if you were a monopolist facing a downsloping demand curve, which portion of the curve would you strive never to be in In other words, you can choose any price and output combination you want.
Given the following demand curve Q=100 - 2P determine the price elasticity of demand at the following prices. 1. P = 10, Elasticity = 2. P = 30 Elasticity = ?
Assume that in a different competitive industry, there are 8 firms, each with a marginal cost equal to MC = 20-10q +q^2 Average cost is minimized at q = 10 and AVC is minimized at q = 8 for each of these firms. Demand for the product is P = 100-QD
Xon, a small oil company, purchased a new petroleum drilling rig for $1,800,000. Xon will depreciate the drilling rig using MACRS depreciation. The drilling rig has been leased to a drilling company, which will pay Xon $450,000 per year for 8 year..
A firm with market power has an individual consumer demand of Q = 20 - 4P and costs of C = 4Q. What is the optimal price to charge for a block of 20 units
Opportunity Costs. Two graduate business students are considering opening a full-service car wash in Greenville, North Carolina, after graduation. This is an alternative to employment with a local manufacturing firm where they would each earn $70,..
the short-run price elasticity of demand for tires is 0.9. If an increase in the price of petroleum (used in producing tires) causes the market prices of tires to rise from $50 to $60, by what percentage would you expect the quantity of tires dem..
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