Assume that the quarterly demand for an SUV produced by an automobile company is Qd = 150,000 – 1.5P, where Qd is quantity demanded and P is price per vehicle. A. Using the concept of elasticity of demand, what price should be charged to maximize revenue from sales of this SUV? B. Derive the equation for total revettue for this product. Clearly show you steps. C Using (b) above, determine the unit price that maximizes total revenue from sales
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- Wonopoly and natural resource prices Suppose that a firm is the sole owner of a stock of a natural resource. a. How should the analysis of the maximization of the discounted profits from selling this resource (Equation 17.63 be modified to take this fact into account? b. Suppose that the demand for the resource in question had a constant elasticity form q(t)=a[p(t)]b . How would this change the price dynamics shown in Equation 17.67? c. How would the answer to Problem 17.7 be changed if the entire crude oil supply were owned by a single firm?The Potomac Range Corporation manufactures a line of microwave ovens costing $500 each. Its sales have averaged about 6,000 units per month during the past year. In August, Potomacs closest competitor, Spring City Stove Works, cut its price for a closely competitive model from $600 to $450. Potomac noticed that its sales volume declined to 4,500 units per month after Spring City announced its price cut. What is the arc cross elasticity of demand between Potomacs oven and the competitive Spring City model? Would you say that these two firms are very dose competitors? What other factors could have influenced the observed relationship? If Potomac knows that the arc price elasticity of demand for its ovens is 3.0, what price would Potomac have to charge to sell the same number of units it did before the Spring City price cut?If automobiles and gasoline are complements, then their cross-elasticity coefficient is a. strictly greater than 1. b. positive. c. equal to zero. d. negative.
- The price elasticity of demand for air travel differs radically from first-class (1.3) to unrestricted coach (1.4) to restricted discount coach (1.9). What do these elasticities mean for optimal prices (fares) on a cross-country trip with incremental variable costs (marginal costs) equal to $120?Assume the following demand function for Mango Juice: QD = 40-2P a. What is the price elasticity of demand between the price of juice between $10 per unit and $8 per unit? b. What is the value of total revenue and marginal revenue when the price is $10 per unit and the price is $8 per unit? Is demand elastic, unit elastic or inelastic at that price level? c. Assume that the marginal revenue (MR) equation associated with this demand curve is MR= 20-Q .At what quantity level the demand will be unit elastic? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.For problems 1 – 4: The Dolan Corporation, a maker of small engines, determines that in 2019 the demand curve for its product is P = 2,000 - 50Q where P is the price (in dollars) of an engine and Q is the number of engines sold per month. At what price, if any, will the demand for Dolan’s engines be of unitary elasticity? a. $500 b. $1000 c. $250 d. $750
- The demand for Amazon 's Kindle e-reader can be approximated by q(p)=21e−0.01pmillionunitsperyear(50≤p≤400), where p is the price charged by Amazon. Obtain a formula for price elasticity of demand E, and calculate its value at the two endpoints of the given range of prices. Is the price that would maximize annual revenue within the range of prices shown? How would you know this without calculating that price?Suppose a firm has the following demand equation: Q(P) = 100 - 30P + 4A Where Q(P) = quantity demanded at the market price P P = product price (in S) A = advertising spending (in $) Assume for the following questions that initial values of P = $2.00 and A = $1.5,000 No 1--- Suppose the firm dropped the price to $2.60. Would this be beneficial. Explain. (Hint: investigating the link between revenue and price elasticity of demand is the best approach -for this question.) No 2--- Supposed the firm raised the price to $5.00 while increasing its advertising expenditure by $200. Would this be beneficial? REQUIRED 2B: a--- Construct the demand schedules (in a table) of Q, P and A (before and after the increase in advertising spending) -using Excel (detailed steps are optional b----Graph the demand curves (before and after the increasing in advertising spending) -using Excel (details of steps are required. no chatgpt or any ai tool and should be in excel with details of formulaPlease no written by hand solution Instead of assuming a linear demand curve, suppose we assume that demand is char- acterized by the following demand function qD = 13.572P −1.5 (a) Suppose the current price is $5. What is the price elasticity of demand at this price? (b) Over what range of prices is demand elastic? Inelastic? Unit elastic?
- Suppose the demand for crossing the Golden Gate Bridge is given by Q = 10,000 − 1,000P. a. If the toll (P) is $3, how much revenue is collected? b. What is the price elasticity of demand at this point? c. Could the bridge authorities increase their revenues by changing their price? d. In 2019, the San Francisco Bay area Water Emergency Transportation Authority (WETA) announced it was considering the implementation of hovercraft service as a supplement to existing ferries. Suppose that a fast hovercraft alternative to the Golden Gate Bridge is implemented between Marin County and San Francisco. How would the new service affect the elasticity of demand for trips across the Golden Gate Bridge?Assume that the following table represents the demand schedule for the product of your company: Price 0 10 20 30 40 50 60 70 80Quantity 160 140 120 100 80 60 40 20 0per day TotalRevenue (TR) a. Complete the table by calculating the total revenue (TR) figures. b. At what price and quantity is revenue maximised? c. Use the data above to draw the relevant demand curve and the corresponding total revenue(TR) values.d. Use your knowledge about the relationship between elasticity, prices and revenue how you would maximise the total revenue of a company that produces an inelastic good. Substantiate your answer with appropriate diagrams.With the demand function D(p)=400−3p2, Find the Elasticity function E(p)= Find the Elasticity of Demand at a price of $11 At this price, we would say the demand is: ElasticUnit-elasticInelastic Based on this, to increase revenue we should: Keep Prices UnchangedLower PricesRaise Prices