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Lizzie's Lingerie started selling robes for $36, adding a 50 per cent mark-up on cost. Costs were estimated at $24 each: the $10 purchase price of each robe, plus $6 in allocated variable overhead costs, plus an allocated fixed overhead charge of $8. Customer response was such that when Lizzie's raised prices from $36 to $39 per robe, sales fell from 54 to 46 robes perweek.
a. Estimate the optimal (profit-maximizing) pricing strategy assuming a linear demand curve.
b. Estimate the optimal pricing strategy assuming a power demand curve.
c. Explain why there is a difference between the above two strategies.
d. Estimate the size of the profit at both prices, assuming a power demand curve.
e. Estimate the optimal price if the cost of buying the robes rises from $10 to $11, assuming a power demand curve.
As a result of the tax, the equilibrium price increases from $0.20 to $0.22. What fraction of the incidence falls on consumers On firms Suppose the supply elasticity is 0.6. What must the demand elasticity be.
A high-tech stock has the following potentials of either going up or down in next twelve months based on investment analysis of several stockbrokers.Potential Associated Increase Probability /DecreasePercentage as a young enterprising engineer, are..
Suppose GM reduces all of its existing workers from a 50 hour work week to a 40 hour work week but does not lay anyone off or hire anyone new. How will the unemployment rate change as a result How will the growth in GDP change
. The challenger costs $6,000 and has O&M costs of $2,000 per year, increasing by $1,000 per year. The machine will be needed for only three years, and the salvage value at the end
Recent increases in rents have caused the citizens of Elmville to vote for a rent ceiling of $1200. Assuming all rental units in Elmville are identical and the supply and demand for rental units are given by Qs = -1000 + 20P Qd = 50000 - 10P
a) Calculate the coefficients for price, advertising, income and cross-price with soda pop. b) If the current company cost for a bag of popcorn is $0.45, including cost of corn, cost to pop it and the bag, is this the profit maximizing price?
The first provides foundation and structural details so that two additional stories can be added to the required initial two stories at a later date and without modifications to the original structure. by what time would the additional two stories ..
ECOM094 - a. Using the data contained in the dataset, construct the variables that you need in order to estimate eq. (1). b. Estimate eq. (1), report the results and comment on them. Are the results consistent with Taylor’s theory? Explain.
Draw an iso-cost line for this firm, showing combinations of L and K that cost $6 and another iso-cost line showing combinations that cost $12. What are the slopes of these iso-cost lines Sketch the production isoquant depicting 10 units of output.
compare the interest rate earned on $15000 for 25 years at 7% simple interest with the amount of interest earned if interest were compounded annually SIMPLE INTEREST: I=iPN=(0.07)($15,000)(25) I=$26,250 COMPOUND INTEREST I=P[(1+i)^N-1] I=$15,000[(1..
a refresher on how to calculate a riskier investment, when Company A has expected returns of $50,000 and standard diviation of $40,000. Company B has expected returns of $250,000 and standard deviation of $125,000.
how would this merger affect airline costs?
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