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- 1. Consumers are attracted with products that offer discounts on price, buy-one-take-one scheme and goods with freebies. Why? 2. Why is the point of isoquant tangent to the isocost called the optimal combination?Give an example of Quality/new goods bias?he cost of ingredients for a turkey sandwich at The Pit Room is $5, and the daily demand function for this sandwich is d(p) =1200 - 100p. What price should the seller charge to maximize its daily total contribution? Round your final answer to two decimal places.
- Think back to a purchase that you made recently. How would you describe your thinking before you made that purchase?What are the consequences if consumer acts in the market according to Myopia and ignore its neccessary products?Give a Practical Example.Explain: “The success of a new product depends not only on its marginal utility but also on its price.”
- It is estimated that a grocer’s daily profit from the sale of two brands of cherry juice is given by thefunction:P(x,y) = (x - 30)(70 - 5x + 4y) + (y – 40)(80 + 6x – 7y) centswhere x is the price per can of Brand V Juice and y is the price per can of Brand Triple V Juice. CurrentlyBrand V Juice sells for 50 cents per can and Brand Triple V Juice sells for 52 cents per can.i. Use marginal analysis to estimate the change in the daily profit that will result if the grocer raises theprice of Brand Triple V by one cent per can while keeping the price of Brand V unchanged.ii. Find a stationary point of the daily profit function. Classify this stationary point.Assume quantities need not be integers. Demand in a competitive market is Qd(P)=120 – (4/10)*P. If 20 units are transacted, what is the lowest marginal benefit (i.e., MWTP) at which an item is purchased? Round to two decimal places and do not enter a currency symbol. If your answer is $1.125, enter 1.13.Suppose Mr. Mohammed, a seller in the Fruit & Vegetable Market in Al-Aweer, suddenlyrealized that his marginal cost was below the market price of the output. How would he reactif he were a profit maximizer? Analyze.
- In a competitive market, what should consumer do if the marginal utilities/prices ratios are NOT same for all goods? Please explain by referring to MRS.Explain how MRS = MRT is derived for consumers who want to maximize their well-being utility subject to their budget constraint. Also explain how marginal utilities divided by each price of the good are equalized across the available goods is also derived for consumers who want to maximize their being utility subject to their budget constraint.You were promoted as the manager of a new Clean-Well Sanitary Store that sell cleaning andsanitation products wholesale. You recently read in an article that there the price of vitamins isexpected to increase by 20 percent. How will this affect your store’s sales of sanitationproducts?
