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Imagine that you work for the maker of a leading brand of low-calorie, frozen microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. Note: The following is a regression equation. Standard errors are in parentheses. QD = -3,750 - 100P + 25A + 50PX + 8Y (5,234) (2.29) (525) (1.75) (1.5) R2 = 0.90 n = 26 F = 35.25 Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables: QD = Quantity demanded of a unit (dependent variable) P (in cents) = 300 cents per unit (price per unit) PX (in cents) = 200 cents per unit (price of leading competitor’s product) Y (in dollars) = $10,000 (per capita income in the Standard Metropolitan Statistical Area (SMSA) where the 26 supermarkets are located) A (in dollars) = $750 (monthly advertising expenditures) Compute the elasticities for each independent variable. Write down all of your calculations. Determine the implications for each of the computed elasticities for the business in terms of short-term and long-term pricing strategies. Provide a rationale in which you cite your results. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation. Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further assume that the prices are 100, 200, 300, 400, 500, 600, 700, and 800 cents. Plot the demand curve for the firm. Plot the corresponding supply curve on the same graph using the following supply function (with the same prices 100, 200, 300, 400, 500, 600, 700, and 800 cents): QS = -7909.89 + 79.0989P Determine the equilibrium price and quantity. (Show this graphically and/or calculate using algebra.) What short-term and long-term changes in market conditions could shift the demand and supply curves for this product?
Once the crowding-out effect is accounted for, how will the following events affect the aggregate demand curve, as well as real interest rates? Use a Keynesian perspective. The Federal Reserve issues new discount loans.
Why is ethics an integral part of engineering? What is the engineering advantage? What is the problem-solving schematic? What is the problem-solving schematic?
Suppose a chemical factory discharges waste products into a river resulting in significant damages to a local fishery. The marginal damage and the marginal abatement cost (MAC) are given by:
They value campaign funding in terms of dollars spent. Therefore, after spending ci on a campaign.
Elucidate what happens to the price of oranges and the marginal product of orange pickers as a result of the freeze. Can you say what happens to the demand for orange pickers.
She says the tax will generate $100,000 tax revenues per month. What assumption is she making.
Explain gambling from a risk-return perspective and from a Christian worldview. What is wrong (from a Biblical viewpoint) with gambling if consumers want it? Is price-discrimination always wrong? Under what conditions might it be ethically allowable?
q1. suppose the number of employed people in an economy is 121166640. the unemployment rate in this economy is 10.4
Suppose a profit maximizing automobile manufacturer produces its output in two plants, one in the U.S. and the other in Canada. The total costs of producing in the two plants are identical, except that the output produced in the U.S. is subject to a ..
Assume Doughnuts R Us chooses to produce 150 doughnuts. What is the number of doughnut shops in the market.
A monopolist has two specific demanders with demand equations: qA = 10 – p and qB = 10– 2p. This monopolist implements an optimal two-part tariff pricing scheme, under which demanders pay a fixed fee a for the right to consume the good and a uniform ..
Explain the 4 ways the Federal Reserve would increase the money Supply and explain and graph how this would impact interest rates, consumption, and investment, AD, GDP, Prices and Unemployment. (Make sure to include both the money and the goods graph..
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