User Account

All Pages

Elasticity of demand at the current price level

Assignment Help Business Economics
Reference no: EM131638421

1. A manager for a beer company is trying to determine how much to charge for beer in vending machines on a campus. The beer company has an exclusive contract with the campus and needs to determine the optimal pricing level. Weekly demand over the last year is estimated to be Q = 5000 - 2500P. Currently, the company charges $0.75 per unit.

a. What is the elasticity of demand at the current price level? 

b. Is the current price level profit-maximizing? 

c. If the manager wants to maximize revenue, what price level should the beer company charge?

d. What is the elasticity of demand at the revenue maximizing price?

e. If the firm wants to maximize profits, should it charge a price that is higher, equal to, or lower than the answer for Part C. 

f. Assume that a year later the campus has dramatically increased enrollment, so that demand has increased to Q = 5500 - 2500P. What price should the beer company now charge to maximize revenues?

Reference no: EM131638421

Questions Cloud

Difference between laissez-faire capitalism : What is the difference between laissez-faire capitalism, the command system, and the market system?
Problem-teaching and research : Teaching and research. A college newspaper interviews a psychologist about student ratings of the teaching of faculty members.
Income level of representative consumers : The current price of good X is $20, the current price of good y is $16, and the income level of representative consumers is $30,000.
Define success resources for nursing pharmacology : success resources for nursing pharmacology. Are there any other places to look on this site other than through the document section
Elasticity of demand at the current price level : a. What is the elasticity of demand at the current price level? b. Is the current price level profit-maximizing?
Describe the strength of the relationship in the plot : Make a scatterplot of earnings and driving distance. Use earnings as the response variable. Describe the direction, form, and strength of the relationship.
Explain a leadership role and your team members : Have you ever been in a leadership role and your team members were difficult to lead tried to undermine your authority
Why you would want the financial statements to be audited : Explain why you would want the financial statements to be audited. Discuss the implications of the ratios provided for the lending decision you are to make
Suppy of hours for delivering pizzas : Suppose you have two part-time jobs, babysitting and pizza delivery. After younger babysitters start working for less, banysitting clients pay only $8 insteaf.

Reviews

Write a Review

Business Economics Questions & Answers

  Illustrate what can you determine about the market for wheat

illustrate what can you determine about the market for wheat.

  Using the money market and bond market analysis

Using the money market and bond market analysis explain how the Federal reserve could lower the interest rates by buying government bonds from the banking sector of the U.S. economy ( should included two graphs and an explanation)

  Q1 given the goal of maximization of firm value and

q1. given the goal of maximization of firm value and shareholder wealth we have stressed the importance of net present

  Competitive model-price floors-price ceilings-elasticity

Competitive Model, Price Floors, Price Ceilings, Elasticity. Using the Supply and Demand model, show the equilibrium Price and equilibrium Quantity. Label the Consumer Surplus and Producer Surplus on your model.

  Effect on interest rates and thus consumption

The asset (liquidity preference, or speculative) motive/demand for money relates primarily to money’s medium of exchange function. A Keynesian would view expansionary monetary policy as having its impact primarily through its effect on interest rates..

  About marginal and average tax rates is correct

Which of the following statements about marginal and average tax rates is correct?

  Draw the cash flow diagram

Lee Inc, is considering a robot that will cost $6,000 to purchace. At the end of it 9 year life, it salvage value will be $1,000. The robot will need to overhauled in year 5 at a cost of $3,000. O&M costs per year will be $1,000. The robot will gener..

  Innovation on the equilibrium quantity and price of milk

The invention of a self-milking cow machine allows cows to milk themselves. Not only does this reduce the need for higher-cost human assistance in milking, but it also allows the cow to milk herself three times a day instead of two, leading to both a..

  What happens to the population size in the long run

What happens to the population size in the long run? Does the Iron Law of Wages (where Malthus asserted that technological change would not improve human living standards) hold in this case? Why or why not?

  A luxury good is defined as one for which

A luxury good is defined as one for which:

  Growth rates in the solow model

Growth rates in the Solow model (II): Suppose an economy begins in steady state and is characterized by the following parameter values: s 0.2, d 0.1, A 1, L 100. Apply your answer to question 8 to calculate the growth of per capita GDP in the period ..

  Determine whether it is better to rent or own

Neglect other concerns, like closing costs, capital gains, and tax consequences of owning, and determine whether it is better to rent or own.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd