Solve for %AP or %AQ using the respective Elasticity measure. (a) In non-absolute value form, if nqp,P = -0.5 and %AQ = 16%, what is %AP? (b) In non-absolute value form, if nop p = -2.5 and %AQ = -10%, what is %AP? (c) In non-absolute value form, if nop.p = -1.0 and %AP = -10%, what is %AQ? ',P
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- . Penguin Co. is planning to reduce the price of its refrigerators by 10 per cent. It is also expected that the disposable income will increase by 6% during the same period. The price and income elasticity are estimated to be -1.3 and 2.0 respectively. Currently Penguin is selling 2,00,000 pieces per year. How much can Penguin hope to sell after the above changes in price and income?The formula to calculate elasticity using the arc method is given below: E=Q2-Q1Q1+Q22P2-P1P1+P22Where,Q1= initial quantityQ2=new quantityP1=initial priceP2=new price E=340-306306+340221-2424+212E=34323-322.5E=34×22.5323×-3E=765-969E=-0.79 The value of elasticity in absolute terms is 0.79. Since the value of elasticity in absolute terms is less than one (0.79<1) the demand is inelastic. Can you put the above in correct format as per the formolation i get the answer different so not sure if i am doing something wrong see pic.You are hired as a consultant at a revenue management firm and one of ourrecent clients wished to determine the optimum price for their consumer electronics product.The cost of the product is $100 and before retaining us, they had been selling the product at$200 because it felt like a nice round number. The current sales volume is 1000 units peryear. We examined the market preferences and buying behavior, and concluded that thiscompany’s marketplace has a price elasticity of 1 (i.e. Assume that an x% change in pricewill result in an x% change in sales volume for any x). What is the optimal price thatmaximizes total profit for this company? What are the sales volume, total revenue and totalprofit at the optimal price?
- Agnes, a General Manager in XXX Company, estimated a multiplicative demand function of the form: using a cross-section data collected in the company sales on 30th June, 2019. The estimation results are as follows: Constant Price(P) Income (I) Price of other Good (Po) Estimated coefficient 0.022 -0.223 1.354 0.133 Standard Error 0.012 0.056 0.502 0.814 t-statistic (1.19) (-3.98) -2.69 -0.13 Number of Observations, n=210; R-squared= 0.7516 Critical Students t=1.96 at 5% Level of Significance Write down the estimated demand equation Interpret the coefficients and value Describe any three managerial decisions that can be applied by the manager from the estimated demand functionDashboard for Online Pricing Online the timing and tailoring of prices to specific models of products is the key to successful pricing in online markets. And “Thanks to the ready availability of data in online markets, a pricing manager can easily approximate the elasticity of demands for the different products it sells online.” Assuming a 10 percent decrease in price increases sales by 25 percent, calculate the price elasticity of demand? If the wholesale price of the online product is $50 and sells at a price comparison site that charges $.50 per click and boasts a conversion rate of 5 percent (an average of 20 clicks are needed to generate a sale). What price should you charge for the product? What is the optimal markup on cost? The authors assert that price sensitivity is affected by (1) product life cycles, and (2) numbers of competitors. In fact, “when the number of competing sellers doubles, a firm’s elasticity of demand is expected to double (and you should be able to…The management believes that every 5% increase in the selling price of one of the company's products leads to a 8% decrease in the product's total unit sales. The product's price elasticity of demand is closest to: a. -2.41 b. -1.25 c. -1.99 d. -1.71
- Using regression analysis on data from a field experiment, the demand curve for a product is estimated to be QXd = 1,200 − 3PX − 0.1PZ where Pz = $300. What is the own price elasticity of demand when Px = $240? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above $240? Enter your response rounded to one decimal place. Own price elasticity: Demand is: . If the firm prices above $240, revenue will:Using regression analysis on data from a field experiment, the demand curve for a product is estimated to be QXd = 1,200 − 3PX − 0.1PZ where Pz = $300. a. What is the own price elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below $140?Enter your response rounded to two decimal places. Own price elasticity: Demand is: . If the firm prices below $140, revenue will:The demand for electricity in the Lake Woebegon region is Qd(p) = 100−10p. Quantity is measured in GWh per year and price in monetary units (MU) per GWh. The consumer price of electricity consists of the price of electricity, which can be bought in the competitive electricity market at 2 MU/GWh, and the transmission price. The transmission of electricity from sellers to buyers is provided by the PowerGrid Corporation. The annualized cost of maintaining a power grid with a transmission capacity of k GWh is c(k) = 30 + k MU. What is the transmission capacity, consumer price of electricity, yearly consumer surplus, PowerGrid’s profit, and total surplus, in each of the following cases? (a) PowerGrid Corp sets the price of transmission to maximize profits. (b) PowerGrid Corp sets the price of transmission to maximize total welfare, subject to the constraint that it cannot make a loss. (c) The fixed costs of maintaining transmission capacity increase a little bit. What kind of impact does…
- The price elasticity of demand for soft drinks is -1.6. SK Jaleel sells 500,000 cases of 250ml soft drink at a price of $60 per case. Sollo sells 380,000 cases at the same price point, but decides to implement a 5% price cut to increase their sales. The impact is felt by SK Jaleel as their product demand drops by 20%. What price adjustment is necessary by SK Jaleel in order to have a production level of 450,000 cases? a.Drop price by $5.68 per case b.Drop price by $2.95 per case c.Drop price by $3.34 per case d.Drop price by $3.87 per case e.Drop price by $4.26 per caseWorldwide annual sales of smartphones over a two year period were approximately q=-4p+3020 million phones at a selling price of $p per phone. (a) obtain a formula for the price elasticity of demand E E=_____ (b) in one of the years the actual selling price was $305 per phone. What was the corresponding price elasticity of demand? E=_____ (c) The demand was going down by about _____% per 1% increase in the price at that price level. (d) use your formula for E to determine the selling price that would have resulted in the largest annual revenue. $____ What would’ve been the resulting annual revenue? $____ billionThese questions require application of economic theory relating to elasticity of demand andsupply. All calculations must be shown in full. Answer ALL the questions.Q.3.1 A store that sells maize meal discovers that when the price of 1kg maize meal IsR24 per kilogram, the quantity demanded is 306 kgs per week. When the pricedecreases to R21 per kg, then the sales increase to 340 kgs per week. Use thisinformation to answer questions Q.3.1.1 and Q.3.1.2 below.Q.3.1.1 Determine the price elasticity of maize meal using the Arc method. (5)Q.3.1.2 Discuss the relationship between the price elasticity of maize mealand the total revenue the store received from the sales. Advise thestore on an appropriate pricing strategy.(7)Q.3.2 The store selling maize meal makes a further discovery, when the price of ricechanges from R30 per kg to R26 per kg, then the quantity of rice demandeddecreases from 1360 kg per month to 1238 kg per month. Use this informationto answer Q.3.2.1 and Q.3.2.2 below.Q.3.2.1…