Reference no: EM131251973

Use Managerial economic theory to anwer those Questions in detail please

1. You are one of the few distributors of light switches in your city. You sell your switches in large batches to building contractors. You have noticed that contractors who build residential housing are more price sensitive than contractors who build business units. Assuming your current price is optimal when selling to both groups, would it be a good idea to lower the price to residential contractors and raise it for business contractors?

2. Coal consumption tends to change with the economic cycle - declining during a recession and increasing during a boom. As a result we would expect coal prices to vary a lot with the economic cycle. Would you agree or disagree?

3. Some wine imported into China faces an import tax (for example wine from the European Union is taxed at 14%) while wine from other countries (such as New Zealand) is not taxed. Would it be more or less efficient to tax wine from all countries? Currently, the tax is levied on importers. Would it be more efficient to tax wine drinkers instead?