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Your friend invests and patents a portable ice cream carrier (PCC) which you plan to manufacture as well. You determine the demand function for the product is
Q = 120 - 3P while the cost is TC = 2Q
a. what are your profit maximizing price and quantity for this product? what profits will you make?
Suppose your market research leads you to conclude that there are two distinct groups of consumers interested in the PCC, restaurants and homes. You determine that each has a different demand curve as follows
Qrest = 70 - 2P
Qhome = 50 - P
You can easily distinguish between the two by the fact that restaurants have licenses to sell food while homes do not. And because the PCC is adjusted to the average quantity of ice cream being carried by that particular consumer (this is done at the time of the sale) resale is no possible. You decide that this is a great opportunity to engage in 3rd degree price discrimination (charge each group a different price)
b. what price will you charge resaurants and what price will you charge homes? how many PCC's will you sell to each?
Suppose the tax rate on the first $10K income is 0: 10% on the next $20K; 20% on the next $20,000; 30% on the next $30K; and 40% on any income over $80K. Family A has income of $40K and Family B has income of $100K. What is the marginal and averag..
Assume that the federal government increases spending on public works programs, such as highway construction, by $40 billion. How does this change in spending affect the aggregate demand curve Explain why the shift may be higher or lower than the ..
Terry utility function over leisure (i) and other goods (y) is U(y,1)+y+1*y. the associated marginal utilities are M Uy=1 +1 and M U1=y. he purchases other goods at price of $1, out of the income he earns from working.
Assume that nominal income is $35,000 and the price index is 1.20 in year 1. In year 2, nominal income rises to $38,000 and the price index rises to 1.25. What was the percentage change in real income from year 1 to year 2? Make your calculations ..
The United States is currently recovering from its bad recession in over twenty-five years. Applying the resource provided in this and earlier modules of course describe what factors or activities you think helped cause this economic condition.
An investment opportunity has the potential of generating yearly revenues with the associated probabilities for the next five years as shown below. The salvage value at the end of five years is 0. The potential revenue in any given year is indepen..
The national highway traffic safety administration.raised the average fuel efficiency standard to 35.5 miles per gallon for cars and light trucks by the year 2016. The rules will cost consumers an average of $434 extra per vehicle in the 2012 mode..
American Airlines produces round-trip transportation between Dallas and San Jose using three inputs: capital (planes), labor (pilots, flight attendants, and so on), and fuel. Suppose that American's production function has the following Cobb-Dougl..
Starting with the estimated demand function for Chevrolet: Qc = 100,000 - 100Pc + 2000N + 50I + 30Pf - 1000Pg +3A + 40,000Pi. Assume the average value of the independent variables changes to N= 225 million, I= 12,000, Pf= 10,000, Pg= 100 cents, A=..
an investment cost of $50,000; maintenance costs that start at $5,000 at the end-of-year (EOY) one and increase by $1,000 for each of the next four years, and then remain constant for the following five years; savings of $20,000 per year (EOY 1-10..
A labor economist estimates a regression of log earnings on schooling, experience, ability, as measured through, and interactions in schooling and experience,
a. Graph the demand and supply curves. What is the equilibrium price and quantity in this market b. If the actual price in this market were ABOVE equilibrium price, what would drive the price toward the equilibrium
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