Demand and supply, Managerial Economics

The demand for good X is estimated to be: 
where px price of X in dollars
M = personal disposable income in trillions of dollars per year

Py = price of a competitive in dollars 

Ax = advertising expenditures in dollars $ per year

Qx = sales per year in U.S

Suppose PX = $5, PY = $10, M = $2500, and AX = $100.
a. What is the demand curve and quantity demanded for good X?

b. At the current price, will total revenue rise or fall if the price of the good is lowered?  Why?

c.  From the conditions in part a, what is the point income elasticity of demand?

d. What is the cross-price elasticity between goods X and Y?  Are goods X and Y substitutes or complements?  Why? Would the cross-price elasticity between Y and X be the same?

e.  From the conditions in part a, what is the point advertising elasticity of demand?

f.  Is the demand facing this company more sensitive to a one percent increase in income or a one percent increase in advertising expenditures?

g. Find the algebraic expressions for  the company's  total and marginal revenue functions. (Remember, TR = f(Q) and MR = f(Q).)

h. Produce a graph of total revenue and marginal revenue.  Graph total revenue for quantities up to 7,500 and put the marginal revenue graph on separate axes, and graph marginal revenue for quantities up to 7,500 also.

i.  What level of sales will maximize the  company's  total revenues?  What price  does  the company have to charge for X for that level of sales result?

Posted Date: 4/12/2013 1:09:57 AM | Location : United States

Related Discussions:- Demand and supply, Assignment Help, Ask Question on Demand and supply, Get Answer, Expert's Help, Demand and supply Discussions

Write discussion on Demand and supply
Your posts are moderated
Related Questions
a)      In 1948, the money GNP was $520 billion and the price index was 120.  In order to   make the 1948 GNP comparable with the base year, the 1948 GNP must be adjusted    to:

Theories associated with different market structures A firms profit maximising output decisions take into account the market structure under that they operate. There are 4 type

pricing under oligopoly

Determine the studies of Managerial economics Managerial economics studies the application of techniques, principles as well as concepts of economics to managerial problems of

What are the tools of factor markets and the distribution of income? Tools of factor markets and the distribution of income: a. Factor distribution of income b. Marginal

According to J.B. Clark's profits arises in a dynamic economy, not in a static one. A static economy is one in which there is absolute freedom of competition population and capital

What is the role of scarcity in management decisions-making

Average Total Costs (ATC) This is total cost per unit of output, obtained by dividing total cost by total output i.e. ATC   =   Total Cost              Total Outp

Hi Could you please help me with " Ramsey pricing in detail " as I have an assignment.