Nike Store at Lee Plaza in Dumaguete City wants to know the optimal price of one of their Clarkson shoe model, taking into account the purchases of socks and insoles. The current price of the Clarkson shoes is P4,499.50 per pair, the related annual sales of which is 24 pairs. The cost of the shoes is estimated at P3,450.00. The elasticity of demand for the shoes is estimated at -2.9 and assumed to be constant within a relevant price range. Every purchase of a pair of the Clarkson model leads to an average of 2 pairs of socks and 1 pair of insole being sold. The socks and insoles contribute P95, and P70, respectively. What is the expected profit from the shoes only?

Nike Store at Lee Plaza in Dumaguete City wants to know the optimal price of one of their Clarkson shoe model, taking into account the purchases of socks and insoles. The current price of the Clarkson shoes is P4,499.50 per pair, the related annual sales of which is 24 pairs. The cost of the shoes is estimated at P3,450.00. The elasticity of demand for the shoes is estimated at -2.9 and assumed to be constant within a relevant price range. Every purchase of a pair of the Clarkson model leads to an average of 2 pairs of socks and 1 pair of insole being sold. The socks and insoles contribute P95, and P70, respectively. What is the expected profit from the shoes only?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 6E: The economic analysis division of Mapco Enterprises has estimated the demand function for its line...

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Nike Store at Lee Plaza in Dumaguete City wants to know the optimal price of one of their Clarkson shoe model, taking into account the purchases of socks and insoles. The current price of the Clarkson shoes is P4,499.50 per pair, the related annual sales of which is 24 pairs. The cost of the shoes is estimated at P3,450.00. The elasticity of demand for the shoes is estimated at -2.9 and assumed to be constant within a relevant price range. Every purchase of a pair of the Clarkson model leads to an average of 2 pairs of socks and 1 pair of insole being sold. The socks and insoles contribute P95, and P70, respectively. What is the profit-maximizing price for the pair of shoes? (Note: Ignore the currency sign and commas. Your answer should be up to two decimal places only.) Answer:
Nike Store at Lee Plaza in Dumaguete City wants to know the optimal price of one of their Clarkson shoe model, taking into account the purchases of socks and insoles. The current price of the Clarkson shoes is P4,499.50 per pair, the related annual sales of which is 24 pairs. The cost of the shoes is estimated at P3,450.00. The elasticity of demand for the shoes is estimated at -2.9 and assumed to be constant within a relevant price range. Every purchase of a pair of the Clarkson model leads to an average of 2 pairs of socks and 1 pair of insole being sold. The socks and insoles contribute P95, and P70, respectively. What is the profit-maximizing price for the pair of shoes?
Nike Store at Lee Plaza in Dumaguete City wants to know the optimal price of one of their Clarkson shoe model, taking into account the purchases of socks and insoles. The current price of the Clarkson shoes is P4,499.50 per pair, the related annual sales of which is 24 pairs. The cost of the shoes is estimated at P3,450.00. The elasticity of demand for the shoes is estimated at -2.9 and assumed to be constant within a relevant price range. Every purchase of a pair of the Clarkson model leads to an average of 2 pairs of socks and 1 pair of insole being sold. The socks and insoles contribute P95, and P70, respectively. What is the expected profit from the complementary products? (Note: Ignore currency symbol and comma. Round your answer to the nearest ones.)
You have been hired as an economic consultant to assess the feasibility of building a new hockey arena in the city of Saskatoon. The demand curve for attendance at the new arena per game is given by P = 100 – 0.005Q and average attendance per game (35 home games) is optimistically forecast to be 12,000; the demand curve for other entertainment goods which are thought to be substitutes for basketball games is given by P = 1500 – 0.01Q and an estimated total of 100,000 tickets per year are sold for these events. Per capita income in Saskatoon is currently estimated to be $40,000 per year, which is forecast to rise to $40,100 after stadium construction is completed (local population = 600,000). The income multiplier is thought to be 1.2. Construction costs for the new arena are budgeted to total $175 million with annual arena maintenance costs of $5 million. The city will pay for the annual maintenance costs for the first three years of arena operations. The market rate of interest is 2%.…
On September 2, 2021, the Malaysian government set a ceiling retail price of RM19.90 for COVID-19 Self-Test Kit, which would take effect on September 5, 2021. Discuss the advantages and disadvantages of the policy.
Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is −3.0. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $215. Determine your optimal per unit price if: Instructions: Enter your responses rounded to two decimal places.
The market demand for a monopoly firm is estimated to be: Qd = 80,000 -400P + 3M + 2000PR where Q is output, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $60,000 and $15, respectively, in 2018. For 2018, the forecasted demand function is…
A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q = +15,000 - 2.80P + 150A + 0.3Ppc + 0.35Pm + 0.2Pc The variables and their assumed values are Q = Quantity P = Price of basic model = 7,000 A = Advertising expenditures (in thousands) = 52 Ppc = Average price of a personal computer = 4,000 Pm = Average price of a minicomputer = 15,000 Pc = Average price of a leading competitor’s workstation = 8,000 Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm’s marketing and pricing policies?
The manager of a sole distributorship for a famous brand of automobiles was discussing with the assistant manager the planned introduction by mid-year of a new model, the XP-60. It was decided earlier that the price be set at P400,000, at which level the total number of units sold was estimated at 500 units annually. The assistant manager has suggested that the price should be set at a somewhat lower level, say, at P360,000 to attract a major segment of the non-targeted market. At this lower price, 1,000 units are expected to be sold. 1. What is the total revenue (TR) function? 2. What is the marginal revenue (MR) function? 3. What is the marginal revenue at the originally proposed price and at the recommended lower price?
The manager of a sole distributorship for a famous brand of automobiles was discussing with the assistant manager the planned introduction by mid-year of a new model, the XP-60. It was decided earlier that the price be set at P400,000, at which level the total number of units sold was estimated at 500 units annually. The assistant manager has suggested that the price should be set at a somewhat lower level, say, at P360,000 to attract a major segment of the non-targeted market. At this lower price, 1,000 units are expected to be sold. 1. Will total revenue increase or decrease as a result of the decision to reduce the price? If so, by how much? a. Increase by P 160M b. Decrease by P 80,000 c. Decrease by P 160M d. Increase by P 80,000 2. Using the concept of elasticity, how much is the price of the product that will yield the highest total revenue? 3. Using the concept of elasticity, how many units of the product must the firm sell to maximize its total…
The manager of a sole distributorship for a famous brand of automobiles was discussing with the assistant manager the planned introduction by mid-year of a new model, the XP-60. It was decided earlier that the price be set at P400,000, at which level the total number of units sold was estimated at 500 units annually. The assistant manager has suggested that the price should be set at a somewhat lower level, say, at P360,000 to attract a major segment of the non-targeted market. At this lower price, 1,000 units are expected to be sold. What is the firm’s price function of demand for the product given the estimates and projections made?
The manager of a sole distributorship for a famous brand of automobiles was discussing with the assistant manager the planned introduction by mid-year of a new model, the XP-60. It was decided earlier that the price be set at P400,000, at which level the total number of units sold was estimated at 500 units annually. The assistant manager has suggested that the price should be set at a somewhat lower level, say, at P360,000 to attract a major segment of the non-targeted market. At this lower price, 1,000 units are expected to be sold. 1. Using the concept of elasticity, how much is the price of the product that will yield the highest total revenue? 2. Using the concept of elasticity, how many units of the product must the firm sell to maximize its total revenue?