Demand curve slope, Strategic Management

Assignment Help:

Why does the demand curve slope down?

Bridgette has an income of $480 which she uses to purchase only two goods:  CDs and mystery novels.  The price of a CD, PCD is $10, and the price of a mystery novel, PMN is $12.  Assume all indifference curves have the normal "bowed" shape.

a.   Draw Bridgette's budget constraint, putting mystery novels on the horizontal axis.  At her consumer optimum, she buys 30 CDs and 15 mystery novels.  Draw an indifference curve that leads to this choice.  What is her marginal rate of substitution (MRS) of CDs for mystery novels at this point?

b.   Now suppose that PCD rises to $15, PMN rises to $18, and Bridgette's income rises to $720.  How (if at all) will she adjust her consumption of CDs and mystery novels from part (a).

c.   Now return to the situation where PCD = $10, PMN = $12, and Income = $480.  For a membership fee of $120, Bridgette can join a discount shopping club and buy at the lower prices of PCD = $9 and PMN = $6.

Will Bridgette take this option?  Why or why not?  [Hint:  With the option, Bridgette's budget constraint will go through 30 CDs and 15 mystery novels, but it will not have the same slope as before.]


Related Discussions:- Demand curve slope

Successful business teams, 1 Explain the characteristics of successful busi...

1 Explain the characteristics of successful business teams 2 Explain the importance of team roles in successful business teams 3 Examine the value of using theoretical models whe

Material facts - sample case briefing, Material Facts: The defendant'...

Material Facts: The defendant's son held an "open invitation" party at  his  parent's home.  Guests, to include minors, were  encouraged  to  "bring their own  bottle." The p

Targeting , targeting strtegics with live examples

targeting strtegics with live examples

Mission statements for an organization, a) Examine core organizational valu...

a) Examine core organizational values (ethical, cultural, environmental, social and business) with the present business objectives of an organization. b) Make appropriate vision a

Mensa, Develop a five-year strategic plan with cost estimates and a time li...

Develop a five-year strategic plan with cost estimates and a time line. It should be 5-7 double-spaced, typed (12 point) pages plus exhibits. Your plan should include/address the f

Stakeholders, Ask What advantages are there to employees as stakeholders ar...

Ask What advantages are there to employees as stakeholders are available in Germany that are not provided to employees in US companies? In the United States, how do employees let

#title ..core competencies , a. Core competencies are the collective ____...

a. Core competencies are the collective __________ in the organization

GE matrix, Characteristics of each component of GE matrix

Characteristics of each component of GE matrix

Case study using blue ocean strategy, Astor Lodge & Suites, Inc. There are ...

Astor Lodge & Suites, Inc. There are two parts: part A: describe the Us hotel industry and competitive positioning and financial performance. Part B: study the Aus hotel industry a

Strategic management, 1. “A mission describes what the organization is now;...

1. “A mission describes what the organization is now; a vision statement describes what the organization would like to become.” Differentiate between corporate mission and strategi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd