Suppose the own price elasticity of market demand for retail gasoline is -0.9, the Rothschild index is 0.6, and atypical gasoline retailer enjoys sales of $1, 200, 000annually. What is the price elasticity of demand for arepresentative gasoline retailer's product? Instruction:Enter your response rounded to two decimal places. Ifentering a negative number, be sure to use thenegative (-) sign.

Suppose the own price elasticity of market demand for retail gasoline is -0.9, the Rothschild index is 0.6, and atypical gasoline retailer enjoys sales of $1, 200, 000annually. What is the price elasticity of demand for arepresentative gasoline retailer's product? Instruction:Enter your response rounded to two decimal places. Ifentering a negative number, be sure to use thenegative (-) sign.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 10MC: You are considering entry into a market in which there is currently only one producer (incumbent)....

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own price elasticity of market demand for retail gasoline is -0.8,the Rothschild index is 0.5, and a typical gasoline retailer enjoys sales of$1.5 million annually. What is the price elasticity of demand for a representative gasoline retailer's product?
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Suppose demand and supply curves for you company’s product are given by:QD = 10 -XP QS =5 +YP You will need to find value for X between [0.1 -3] and Y between [0.1 -3] based on the elasticity of demand and supply. This elasticity in turn depends on the type of product, marketstructure and competitive advantage of the company. In this case, the product is an electric car and the price elasticity of demand is high.
Management of McPablo’s Food Shops has completed a study of weekly demand for its “old-fashioned” tacos in 53 regional markets. The study revealed that Q = 400 -1,200P + .8A + 55Pop + 800P° where Q is the number of tacos sold per store per week, A is the level of local advertising expenditure (in pesos), Pop denotes the local population (in thousands), and P0 is the average taco price of local competitors. For the typical McPablo’s outlet: P = Php1.50, A = Php1,000, Pop = 40, and P0 = Php1.00. Estimate the weekly sales for the typical McPablo’s outlet. What is the current price elasticity for tacos? What is the advertising elasticity? Should McPablo’s raise its taco prices? Why or why not?
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GM’s Food Shops has completed a study of weekly demand for its “new-fashioned” tacos in 53 regional markets. The study revealed that where Q is the number of tacos sold per store per week, A is the level of local advertising expenditure, Pop denotes the local population (in thousands), and Pr is the average taco price of local competitors. For the typical GM’s outlet, P = P1.50, A = P1,000, Pop = 40, and Pr = P1. Q = 400 - 1,200P + 0.8A + 55Pop + 800Pr Estimate the weekly sales for the typical GM’s outlet. Determine the equilibrium price and equilibrium quantity, if supply is Qs = 700 + 1,200P considering the general demand function of GM’s outlet Should GM raise its taco prices? Why or why not?
Suppose demand and supply curves for you company’s product are given by:QD = 10 -XP QS =5 +YP You will need to find value for X between [0.1 -3] and Y between [0.1 -3] based on the elasticity of demand and supply. This elasticity in turn depends on the type of product, marketstructure and competitive advantage of the company. In this case, the product is an electric car and the price elasticity of demand is relatively high. Moreover, this does not have to be an exact value, and it should be done by looking at the graph of the price elasticity.
Refer to the figure below:Use the estimated elasticities to calculate the Rothschild index for each industry.Instruction: Enter your responses rounded to three decimal places for the Rothschild Index column in the table.
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Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is -1.5. The marginal cost of producing the product is constant at $125, while average total cost at current production levels is $190.Determine your optimal per unit price if:Instruction: Enter your responses rounded to two decimal places.a. You are a monopolist.$ b. You compete against one other firm in a Cournot oligopoly.$ c. You compete against 19 other firms in a Cournot oligopoly.$