George Michael sells frozen bananas to his uncles Buster and Gob, who are his only customers and who live off of a $15 allowance (each) from their mother Lucille. Buster’s demand function is D(p, m) = 25 − 2p + m 3 and Gob’s demand function is D(p, m) = 15 − p + m 5 . One day the freezer breaks. What is the highest price George Michael can charge his uncles if he wants to unload his entire inventory of 42 frozen bananas?
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George Michael sells frozen bananas to his uncles Buster and Gob, who are his only customers and who live off of a $15 allowance (each) from their mother Lucille. Buster’s
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- After talking your managerial economics class, you realize that you can probably raise your profits by price discriminating by charging different prices in the two locations. You then breakdown sales across the two locations In Laredo: You sold 200 burger meals per week at $9 and 100 meals at $10 In San Antonio: You sold 1200 meals per week at $9 and 1100 meals at $10 Using the two prices above, estimate your demand function in Laredo. What would demand be at the optimal price from Q1? Using the two prices above, estimate your demand function in San Antonio. What would demand be at the optimal price from Q1? Calculate the point price elasticity of demand at the optimal price for Q1 (and quantity from part A) in Laredo Calculate the point price elasticity of demand at the optimal price for Q1 (and quantity from part B) in San Antonio Assuming that your marginal costs are $3, are you charging more, less, or exactly the optimal price in Laredo Hint: Calculate the markup on price and…After talking your managerial economics class, you realize that you can probably raise your profits by price discriminating by charging different prices in the two locations. You then breakdown sales across the two locations In Laredo: You sold 200 burger meals per week at $9 and 100 meals at $10 In San Antonio: You sold 1200 meals per week at $9 and 1100 meals at $10 Using the two prices above, estimate your demand function in Laredo. What would demand be at the optimal price from Q1?A friend of yours is considering two cell phone service providers. Provider A charges $110 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed service fee but instead charges $1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation QD=100−20PQD=100−20P, where PP is the price of a minute. With Provider A, the cost of an extra minute is . With Provider B, the cost of an extra minute is . Given your friend's demand for minutes and the cost of an extra minute with each provider, if your friend used Provider A, he would talk for minutes, and if he used Provider B, he would talk for minutes. This means your friend would pay for service with Provider A and for service with Provider B. Use the following graph to draw your friend's demand curve for minutes. Then use the green triangle to help you answer the questions that follow. Note: You will not be graded…
- A friend of yours is considering two cell phone service providers. Provider A charges $110 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed service fee but instead charges $1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation QD=100−20P, where P is the price of a minute. With Provider A, the cost of an extra minute is With Provider B, the cost of an extra minute is Given your friend's demand for minutes and the cost of an extra minute with each provider, if your friend used Provider A, he would talk for ___ minutes, and if he used Provider B, he would talk for ____ minutes. This means your friend would pay___ for service with Provider A and ____ for service with Provider B. Use the following graph to draw your friend's demand curve for minutes. Then use the green triangle to help you answer the questions that follow. Your friend would…Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the number of units exchanged and the price at which those units will be exchanged when there is an $8 per unit price floor.Consider a hypothetical situation at the Mitengo Market in Ndola where there are 1000 identical individuals buying bananas, hereafter, to be called commodity X. Each of these individuals has a demand function given by Qdx = 6-Px. In the same market there are also 100 identical producers of bananas from Ndola, each with a supply function given by Qsx = 10Px. (a) Find the market demand function and market supply function (b) Obtain the equilibrium price and quantity mathematically
- Mike has two identical brothers. Each of them have the same utility function below. If Mike and his brothers are the only people in the market, what is the aggregate demand at each price of X below? (Each of their income is $100 and the price of Y is always $1). U (x,y) = x^2/5 Y^3/5 Price of X=$8 Price of X=$4 Price of X=$2 Price of X=$1Take this hypothetical situation: Suppose that the supply side of the market for for electric energy is comprised of two sellers: Seller 1 and Seller 2. Let P be the price of one unit of electric energy, and Q be the quantity of electric energy. Seller 1 owns a hydropower factory with a constant marginal cost of $3 and can produce a maximum of 10 units of electric energy. In addition, the hydropower plant has a requirement of a minimum of 3 units of electric energy. Seller 2 owns a solar factory to produce electric energy. This factory has a constant marginal cost of $5 and can produce a maximum of 5 units of electric energy. With this given information, please sketch the market supply by aggregating the two individual supplies. Please label the graph clearly for slopes, kinks, intercepts, etc.Take this hypothetical situation: Suppose that the supply side of the market for for electric energy is comprised of two sellers: Seller 1 and Seller 2. Let P be the price of one unit of electric energy, and Q be the quantity of electric energy. Seller 1 owns a hydropower factory with a constant marginal cost of $3 and can produce a maximum of 10 units of electric energy. In addition, the hydropower plant has a requirement of a minimum of 3 units of electric energy. Seller 2 owns a solar factory to produce electric energy. This factory has a constant marginal cost of $5 and can produce a maximum of 5 units of electric energy. A) With this given information, please sketch the market supply by aggregating the two individual supplies. Please label the graph clearly for slopes, kinks, intercepts, etc. B) Suppose that the price of geothermal increases. On the graph drawn in part A, show precisely how the supply curve changes. C) Suppose that the price of geothermal increases. In a market…
- The demand function for a truckload of firewood for college students in a small town is QC = 400 − p. It is sometimes convenient to rewrite a demand function with price on the left side. We refer to such a relationship as the inverse demand function. Therefore, the inverse demand function for college students is p = 400 − Qc. The demand function for other town residents isQr = 400 − 2p. 1. What is the inverse demand function for other town residents? 2. At a price of $300, will college students buy firewood? What about other town residents? At what price is the quantity demanded by other town residents zero? 3. Draw the total demand curve, which sums the demand curves for college students and other residents.The term "BOGO" ("Buy One Get One", also referred to as "Buy One Get One Free") has entered the urban dictionary, and is a sales tactic whereby sellers offer buyers a second unit of the item free if they pay full price for the first unit. A variation of BOGO occurs when stores offer a "Buy One Get One Half Off" sales promotion. Why do you think consumers respond to the "Buy One Get One Half Off" sales promotion and what principle of economics does this behavior reflect?Discuss what is Market Pricing and identify all salient factors of market pricing on economic decision-making.
