User Account

All Pages

Economics homework, Managerial Economics

Assignment Help:
1. A sporting goods company has hired a management consulting firm to analyze demand in 20 regional markets for one of its major products: a treadmill. The consultant uses data to estimate the following equation:

Where Q = Number of treadmills demanded
P = $1,200; Price of treadmills
A = $200; Advertising expenditures (in thousands)
I = $60; GDP per capita (in thousands)
PX = $1,000; Competitor’s price
= $150; Competitor’s advertising expenditures (in thousands)
a. Calculate the amount demanded for this product using the information given above
b. Plot the demand curve with P on the vertical axis and Q on the horizontal axis.
c. Calculate the price to sell 2,000 units.
d. What would be the effect on the sales of treadmills if the competitor reduces price by $100? What should be the change in P to offset the decrease in PX?
e. In response to competitor’s strategy of reducing PX, what else can the company do to keep sales at the same level if does not want to change P? (Base your answer on the information given above.)
2. The XYZ Tech Store had been selling a spreadsheet program at a rate of 100 units per month and a graphics program at a rate of 50 units per month. In September 2012, the EXZ Tech Store’s supplier lowered the price for the spreadsheet program, and the XYZ Tech Store lowered its price from $400 to $350.
a. If the price elasticity is -2.14, how many spreadsheets will be sold?
b. If the cross elasticity of spreadsheets and graphics program is -1.11, how many graphics programs will be sold if the initial quantity sold were 50?
c. As a result of this change in spreadsheet price what will happen to total revenue? Why? (No numerical answer needed. Just an explanation)

3. One of the leading dishwasher producers has estimated the following demand equation after analyzing 35 regional markets:
Q = + 20,000 – 40P + 30A + 20 - 40 + 90 I
(12000) (18.2) (44) (8.5) (52) (42)

R2 = 0.82 F = 32.26

The variables and their assumed values are
Q = Quantity
P = Price of basic model = 400
A =Advertising expenditures = 50
=Average price of the competitor’s product = 500
= competitor’s advertising expenditures = 30
I = per capita income = 50

a. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm’s marketing, pricing, and production policies?
b What would be the effect of a 6 unit increase in the competitor’s advertising expenditures?
c. What would be the change in your advertising expenditures to offset your competitor’s strategy?
d. Conduct a t-test for the statistical significance of each variable. Discuss the results of the t-tests in light of the policy implications mentioned.
e. What proportion of the variation in sales is explained by by the independent variables in the equation? How confident are you about this answer? Explain using the F-test.

4. Given the Production Function: Q = 30L + 9L2 -0.5 L3, where Q = Output and L = labor input

a. At what value of L will Diminishing Returns take effect?
b. Calculate the range of values for labor over which stages I, II, and III occur?
c. Suppose that the wage rate is $24 and the price of output is $2 per unit. How many workers should
the firm hire?
d. At what value of L will Q be at its maximum? What is the maximum amount of Q?
e. If demand estimate for Q is between 1600 and 2000, what would be your plan in the long run to meet
customer demand?

5. Given the cost function: ,
a. At what level of Q does the firm achieve minimum average cost?
b. Assume that this is a firm in a perfectly competitive industry and the competitive price is $2/unit.
What should the firm do in the long-run?

Related Discussions:- Economics homework

Demand forecasting, assignment help on demand forecasting

assignment help on demand forecasting

Cvp , cvp analysis

cvp analysis

Budget line and its economic interpretation, The Budget line and its econom...

The Budget line and its economic interpretation The indifference curve shows us consumer preferences but it does not show us the situation in the market place.  Here the consu

Help w/ Question, You have opened your own word processing service. You hav...

You have opened your own word processing service. You have already bought a special computer needed for word processing and paid $5,000 for it. However, due to the cost changes in

Managerial Economics, Calculate point elasticity of demand for demand funct...

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2

Determine net income by product line, Fandem Technology manufactures two pr...

Fandem Technology manufactures two products using a joint process. The cost of materials going into the joint process for a typical period is $55,000, while labour and overhead to

Show the importance of demand forecast, Q. Show the importance of Demand f...

Q. Show the importance of Demand forecast? Demand forecast for a particular commodity furthermore offers recommendations for demand forecast of associated industries. For exam

Methods of demand forecast, No demand forecasting method is 100% accurate. ...

No demand forecasting method is 100% accurate. Collective forecasts develop precision and reduce the probability of huge mistakes.  Methods which relay on Qualitative Assessmen

Economic development corporation, functions of economic development corpora...

functions of economic development corporation

Monopolistic practices, MONOPOLISTIC PRACTICES The following practices...

MONOPOLISTIC PRACTICES The following practices may be said to characterize monopolies. Exclusive dealing to supply and collective boycott Producers agree to supply onl

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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