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1. Suppose as a manager of a profitable department store you are confronted with a pricing problem. You have two types of customers: a high-end type that are willing to pay a price of $25 for a pair of Levis Jeans, and a low-end type customer that are willing to pay a price of $15 for the same pair of jeans. Your marginal costs are $13 per jeans. Your survey of your customers for jeans tells you that 60% of your customers are of the high end type and 40% are of the low end type. (a) If you decided to price high, what would be your expected profits per unit. (b) If you decided to price low, what would be your expected profits per unit. (c) Which pricing will you choose, based on the expected pricing per unit. 2. (a) Suppose a “lemons” car is valued at $2500 and a good car is valued at $5000. If you know that there is a 50% chance of getting each, what is the expected value of the car? (b) What will happen in the market if the price is based on the expected value? Explain. 3. Suppose you have hired a new worker, unfortunately you do not know if the worker is a shirker or a hard worker. Suppose working hard raises the probability of making a sale from 40% to 80% (thus raises the probability of making a commission C by the same percentage). If the cost of working harder is $200, what commission C should you offer the worker to provide an incentive to work hard.
Explain how is it possible which output rises while at the similar time employment is falling.
Create an 3-6 page report, that includes an explanation and/or examples of: A circular flow diagram that includes the government sector. For this part of your paper, you should include a description of the roles that each participant plays in the eco..
Illustrate what was the value of the government expenditure multiplier. What was the value of the tax multiplier.
Why are trade agreements important for the various countries involved? How is international trade related to the U.S. standard of living as opposed to the standard of living of a small industrial nation or a developing nation
pricing strategy varies significantly across different market structures. the pricing guidelines in a monopoly market
When free trade increases market competition, what happens to the ability of a firm to set high prices? What about when trade restrictions are imposed?
Moral Hazard. There is a risk neutral principal and a risk averse agent. The agent exerts effort a that results in output x = a + , where ∼ N(0; 1). Find the first best level of effort. Calculate the profit of the principal. Solve for the second-best..
If the perfectly competitive market demand for cholesterol-free cookies shifts from QD,93 = 1,150 - 5P to QD,94 = 1,640 - 5P, and the market supply is given by QS = -100 + 2P, then the change in equilibrium price will be?
Louisa is managing a training program for a major bank. She designs the following experiment to assess the effect of sleep on learning. A group of trainees is given a 3-hour session on some task, followed by a 2-hour test on what they have just learn..
q.listing different orderings and coalitions is not going to work for this problem because there are too many
A group of 10 people have the following annual incomes: $55,000, $30,000, $15,000, $20,000, $35,000, $80,000, $40,000, $45,000, $30,000, $50,000. Calculate the share of total income received by each quintile of this income distribution.
Compared to the average net worth of white families, the average net worth of black and Hispanic families is ______. (LO1)
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