Would you advise the company to raise the price

Assignment Help Business Economics
Reference no: EM132381951

Answer all four (4) questions. Maximum of 500 words for each question. Use diagrams where appropriate to enhance and explain your response. Provide supporting evidence and references where appropriate to justify your arguments. Please note that in answering economics questions it is important to first identify which part of economic theory you should be drawing on in order to respond appropriately. Your response should always be firstly identifying what part of theory the question relates to and explaining that theory, how the theory helps to answer the question and then presenting the solution to the question poised.

Question 1. Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company's product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

Question 2. Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve.

What do you expect will happen to the domestic auto industry in the long run?

Question 3. For a high-income economy like Australia, what aggregate production function elements are most important in bringing about growth in GDP per capita? What about a middle- income country such as India? A low-income country such as Afghanistan?

Question 4. Imagine that the government statisticians who calculate the inflation rate have been updating the basic basket of goods once every 10 years, but now they decide to update it every five years. How will this change affect the amount of substitution bias and quality/new goods bias?

Presentation

The following points are a general guide for presenting assessment items.

• Responses to assessment items should be typed. Use 1.5 spacing.
• Use a wide left margin. Markers need space to be able to include their comments. Use a standard 12pt font such as Times New Roman, Calibri or Arial.
• Left- justify body text.
• Include a separate title page with your name, student number, subject code, assessment question. Number your pages (except the cover page).
• Use a header or footer with your name and student number on each page.
• Always keep a copy of your assessments. Both a hard copy and an electronic copy.
• Most importantly, always use your spelling and grammar checker, but remember that this does not pick up all errors. You must still manually and carefully edit your work.
• You need to appropriately reference all the articles, reports and web-sites you employ in developing your assignments.

Verified Expert

This study tends to evaluate and measure different economic conditions and concerns.The study of price elasticity has been discussed with supportive examples from the given organization. On the other hand, the case of updating of basic basket of goods and its relativity have been explained in this study. This study has discussed differences of GDP growth in high and low-income countries. Additionally, efforts have been made to discuss conditions of domestic automobile manufacturers and its profitability issue.

Reference no: EM132381951

Reviews

Write a Review

 

Business Economics Questions & Answers

  Best definition of privacy

Conflicts of interest are an ethical problem for a business because they _______. One of the biggest issues in consumer privacy is when _______. Which of the following is the best definition of privacy?

  What is the maximum change in the money supply

Suppose John deposits 20 million into his checking account, if the reserve requirement ratio is .1, what is the maximum change in the money supply?

  Specifications regarding production function are assumed

Suppose this year the working population is 11 million and growing at 15% per year. The current capital stock is 300 million and depreciating at 8% per year. The necessary specifications regarding the production function are assumed. How much new inv..

  Forecast for the next five years

Analyze the history of changes in GDP, savings, investment, real interest rates, and unemployment and compare to forecast for the next five years.

  Sentiment analysis techniques

Give some examples where Sentiment Analysis techniques are being used

  What single amount on jule is equivalent

Each cash flow is equal to $128,000. The nominal interest rate is 12% compounded semi-annually. What single amount on Jule 1, 2015 is equivalent to this cash flow system?

  Money matters but other things like fiscal policy

Monetarists says “Only money matters.” Keynesians answer, “Money matters, but other things like fiscal policy, matter too. “Explain and evaluate each position. Could you disagree with monetarists and still believe that monetary policy should be used ..

  Money supply in a fractional reserve system

Explain how banks can increase the money supply in a fractional reserve system given an initial injection of $100 Billion USD in deposits and a required reserve

  Relevant to weight and appearance discrimination

What laws are relevant to weight and appearance discrimination? How might seemingly legitimate appearance requirements result in illegal discrimination?

  Learning-curve function coefficient

Construct a sensitivity graph for the cost of the 10th, the 100th, and the 1000th item on a learning curve when the first item requires 8000 person-days.

  Derive the block-pricing scheme

In this problem, you will be asked to derive the block-pricing scheme that maximizes profit in the case of 2nd-degree price discrimination when a monopolist faces a consumer with high demand PH = 80 − QH, a consumer with low demand PL = 50 − QL, and ..

  What is the opportunity cost of paid work

When you buy a good in the market place, some one is selling it to you. Thus, when you go to work, you sell yourself. True, False, Explain. What is the opportunity cost of paid work? A perfectly competitive labor market sets what two curves equal to ..

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!

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