Demand and supply, Managerial Economics

Assignment Help:

The demand for good X is estimated to be: 
where px price of X in dollars
M = personal disposable income in trillions of dollars per year

Py = price of a competitive in dollars 

Ax = advertising expenditures in dollars $ per year

Qx = sales per year in U.S


Suppose PX = $5, PY = $10, M = $2500, and AX = $100.
a. What is the demand curve and quantity demanded for good X?

b. At the current price, will total revenue rise or fall if the price of the good is lowered?  Why?

c.  From the conditions in part a, what is the point income elasticity of demand?

d. What is the cross-price elasticity between goods X and Y?  Are goods X and Y substitutes or complements?  Why? Would the cross-price elasticity between Y and X be the same?

e.  From the conditions in part a, what is the point advertising elasticity of demand?

f.  Is the demand facing this company more sensitive to a one percent increase in income or a one percent increase in advertising expenditures?

g. Find the algebraic expressions for  the company's  total and marginal revenue functions. (Remember, TR = f(Q) and MR = f(Q).)

h. Produce a graph of total revenue and marginal revenue.  Graph total revenue for quantities up to 7,500 and put the marginal revenue graph on separate axes, and graph marginal revenue for quantities up to 7,500 also.

i.  What level of sales will maximize the  company's  total revenues?  What price  does  the company have to charge for X for that level of sales result?


Related Discussions:- Demand and supply

Kinds of bargaining arrangements, Kinds of Bargaining arrangements Bas...

Kinds of Bargaining arrangements Basically there are three kinds of bargaining arrangements, namely: Open Shop: In an open shop a union represents its members, but doe

State the characteristics of managerial economics, CHARACTERISTICS OF MANAG...

CHARACTERISTICS OF MANAGERIAL ECONOMICS 1. Uses theory of firm: Managerial economics uses economic principles and conceptsthat are known as theory of Firm or 'Economics of the

What do mean by convex isoquant, Q. What do mean by Convex Isoquant? I...

Q. What do mean by Convex Isoquant? Isoquants are convex to the origin: At any point of an isoquant,the slope is negative. Its numerical value measures the marginal rate of te

The scope of managerial economics, Economics has two major branches: (1) mi...

Economics has two major branches: (1) micro economics, and (2) both micro and macro economics theories. The parts of micro and macro economics that constitute managerial economics

Describe the application of economic theories, Describe the Application of ...

Describe the Application of economic theories Pertinent business decisions necessitate an unambiguous understanding of the environmental and technical conditions under which bu

Describe MRPL and profit maximisation, Q. Describe MRPL and profit maximisa...

Q. Describe MRPL and profit maximisation? The common rule is that firm maximises profit by producing that quantity of output where marginal revenue equals marginal costs. Profi

Structure of population and supply of labour, THE STRUCTURE OF POPULATION A...

THE STRUCTURE OF POPULATION AND SUPPLY OF LABOUR The structure (also called age distribution or composition) of population, or the number of people in the different age groups

Real rigidities in the credit market, Real Rigidities in the Credit Market ...

Real Rigidities in the Credit Market How imperfections in the goods markets enable firms  to  set  prices  so  as to  generate  price  rigidities,  e.g.,  because of countercy

Explain about smooth convex isoquant, Q. Explain about Smooth Convex Isoqua...

Q. Explain about Smooth Convex Isoquant? Smooth Convex Isoquant: This kind of isoquant presumes continuous substitutability of capital and labour over a certain range, beyond

Write Your Message!

Captcha
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