Customer Service Chat
Get quote & make Payment
Economics homework, Managerial Economics
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
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?
Posted Date: 10/21/2012 5:56:33 PM | Location : United States
Ask an Expert
Economics homework, Assignment Help, Ask Question on Economics homework, Get Answer, Expert's Help, Economics homework Discussions
Write discussion on Economics homework
Your posts are moderated
Write your message here..
Optiimization, when firm can achieve optimization
when firm can achieve optimization
Show the isoquant touching axis, Q. Show the Isoquant touching axis? I...
Q. Show the Isoquant touching axis? Isoquants do not intersect: By definition isoquants such as indifference curves, can never cut each other. If they cut each other it will
Demand, what is demand estimation
what is demand estimation
The income of landowners in every country, In Home and Foreign there are 2 ...
In Home and Foreign there are 2 factors of production, land & labor, used to produce only one good. The land supply in every country and the technology of production are exactly th
Theories of the firm, Define Williamson''s Model of Managerial Discretion p...
Define Williamson''s Model of Managerial Discretion practice?
Exceptional supply curves, Exceptional supply curves In have some situ...
Exceptional supply curves In have some situations the slope of the supply curve may be reversed. i) Regressive Supply. In this case, the higher the price within a ce
Keynesian theory of consumption function, THE KEYNESIAN THEORY OF CONSUMPTI...
THE KEYNESIAN THEORY OF CONSUMPTION FUNCTION The theory was developed during the Great Depression which plagued Europe and America. During this time, there was excess capacit
Stabex, STABEX The STABEX scheme was designed to stabilize earnings fr...
STABEX The STABEX scheme was designed to stabilize earnings from exports of the African, Caribbean and Pacific (ACP) countries to the Community. It covered seventeen agricult
External debt problem, External Debt Problem External debt refers to d...
External Debt Problem External debt refers to debt owing by one country to another. External debt is a more serious problem than internal debt because the payment of interest
Smplex method, examples
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
IT Courses and Help
Why Us ?
~24x7 hrs Support
~Quality of Work
~Time on Delivery
~Privacy of Work
Human Resource Management
Literature Review Writing Help
Follow Us |
T & C
Copyright by ExpertsMind IT Educational Pvt. Ltd.