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Analysis of Pricing: You manage Mt. Claire Café which sells meals at a price of $8.50 each. The meal includes a hot dish and a beverage of your choice. The average number of meals sold per month is 21,000. The owners of Mt. Claire Café would like to increase its sales and profits. They know that if price is lowered, they will sell more meals. So they run an experiment. Price is lowered to $7.50 per meal in March and the number of meals sold increases to 23,000. a. What is the Price Elasticity of Demand? b. Is elasticity elastic, inelastic or neither? c. What does this mean and why does it matter? d. Will Revenues increase or decrease as a result of the price cut? By How much? e. Beatrice has calculated the fixed costs for the Café are $18,000 per month and each meal costs $4.50. Will profits go up or down as a result of the price cut? By How much
illustrate what happens to economic output and inflation and explain why these changes take place.
Suppose that GDP is $49,081, taxes are $7,478, consumption is $13,848, transfers are $5,073, and government spending is $10,880. What are national savings?
Explain the key features of each of the the three generations of currency crisis models. Which of the three models best describes each of the financial crises discussed in this chapter? (Book-international finance and open-economy Macro economics by ..
An item is up for auction. Player 1 values the item at 3 while player 2 values the item at 5. Each player can bid either 0,1, or 2. If player i bids more than player j then i wins the good and pays his bid, while the loser does not pay. If both playe..
Suppose (contrary to fact) that the Scottish independence referendum had passed, Scotland had become independent, and you became its finance minister. Your first order of business is to recommend a currency for Scotland.
Explain how the velocity of money is likely to change when the following stabilization policies are undertaken. How will this change in velocity affect the impact of the stabilization policy?
Santa Claus has preferences between milk and cookies. Draw indifference curves to represent the following types of preferences: a) Santa likes milk and cookies, and always gets the same satisfaction from 1 ounce of milk as he does 2 ounces of cookies..
Use the principles of supply and demand to address a predetermined goal (set by the student) in the gasoline market. Be clear on what the current market indicates and why and what your future goal is.
Illustrate what happens to official measure of GDP when air quality improves significantly in united states but there are no effects on aggregate production or on market prices of final goods and services.
Examine the first diagram showing the monthly production possibility frontier for the Tivoli and the monthly production possibility frontier for the Frivoli. Which tribe now has an absolute advantage in producing spaghetti? Which has the comparative ..
If your analysis period (study period) is just three years, what should be the salvage value of project A2 at the end of year 3 to make the two alternatives economically indifferent?
Those who advocate that the Fed target monetary aggregates, usually argue that the Fed should not alter its monetary targets in response to temporary changes in macroeconomic conditions, yet those who advocate interest rate targeting never recommend ..
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