Suppose, you're going to open a new fast food business. Briefly discuss the factors that would possibly affect your fast food business's pricing decisions
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- There are three industrial firms in Happy Valley.FirmInitial PollutionLevelCost of ReducingPollution by 1 UnitA 30 units $20B 40 units $30C 20 units $10The government wants to reduce pollution to 60 units,so it gives each firm 20 tradable pollution permits.a. Who sells permits and how many do they sell?Who buys permits and how many do they buy?Briefly explain why the sellers and buyers are eachwilling to do so. What is the total cost of pollutionreduction in this situation?b. How much higher would the costs of pollutionreduction be if the permits could not be traded?The first principle of economics in Chapter 1 is thatpeople face trade-offs. Use a production possibilitiesfrontier to illustrate society’s trade-off between two“goods”—a clean environment and the quantity ofindustrial output. What do you suppose determinesthe shape and position of the frontier? Show whathappens to the frontier if engineers develop anew way of producing electricity that emits fewerpollutants cars. In an hour, Larry can either mow one lawn orwash one car; Moe can either mow one lawn or washtwo cars; and Curly can either mow two lawns orwash one car.a. Calculate how much of each service is producedin the following scenarios, which we label A, B,C, and D:• All three spend all their time mowing lawns. (A)• All three spend all their time washing cars. (B)• All three spend half their time on each activity. (C)• Larry spends half his time on each activity, whileMoe only washes cars and Curly only mowslawns. (D)b. Graph the production possibilities frontier for thiseconomy.…It’s Friday night. You already have a ticket to aconcert, which cost you $30. A friend invites youto go out for a game of paintball instead. Admission would cost you $25, and you think you’d get$25 worth of enjoyment out of it. Your concertticket is nonrefundable. What is your opportunitycost (in dollars) of playing paintball?
- 2. Your opportunity cost of going to a movie isa. thepriceoftheticket.b. thepriceoftheticketplusthecostofanysodaandpMake diagtna ne ceWhen two individuals produce eff iciently and thenmake a mutually beneficial trade based on com para~tive advantage,a. they both obtain consumption outside their productionpossi bil ities frontier.b. they both obtain consumption inside their p rod u c ~tion possi bil ities frontier.c. one individual consumes inside her productionpossibilit ies frontier, while the other consumesoutside hers.d. each ind ividual consumes a poi nt on her ownproduction possibi lities frontier.
- Two athletes of equal ability are competing for aprize of $10,000. Each is deciding whether to takea dangerous performance-enhancing drug. If oneathlete takes the drug and the other does not, the onewho takes the drug wins the prize. If both or neithertake the drug, they tie and split the prize. Taking thedrug imposes health risks that are equivalent to a lossof X dollars.QuickQuiz Answers1. d 2. c 3. a 4. d 5. c 6. b 7. d 8. ba. Draw a 2×2 payoff matrix describing the decisionsthe athletes face.b. For what X is taking the drug the Nashequilibrium?c. Does making the drug safer (that is, lowering X)make the athletes better or worse off? Explain.The first principle of economics in Chapter 1 is thatpeople face trade-offs. Use a production possibilitiesfrontier to illustrate society’s trade-off between two“goods”—a clean environment and the quantity ofindustrial output. What do you suppose determinesthe shape and position of the frontier? Show whathappens to the frontier if engineers develop anew way of producing electricity that emits fewerpollutantsplease solve d and e Imagine a country XYZ that produces only two goods—chairs and tables. Together, the chairs and tablesindustries use all of the economy’s factors of production. The table below shows the productionpossibilities for XYZ:Production Possibilities for XYZChairs Tables600 0450 150300 250150 325 0 375a. Draw a Production Possibility Frontier for the country using the information in tableabove. b. What is the opportunity cost of increasing chairs production from 450 chairs to 600chairs?c. What is the opportunity cost of increasing tables production from 250 tables to 325tables?d. Plot the point denoting 300 chairs and 300 tables on your graph above. Is this point“feasible”? Why or why not?e. Plot the point denoting 300 chairs and 50 tables on your graph above. Should XYZ beproducing at this point? Why or why not?
- u work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashies, flopsicles, and mookies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashies increases by 4%, the quantity of flopsicles sold increases by 1% and the quantity of mookies sold decreases by 5%. Your job is to use the cross-price elasticity between splishy splashies and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the…Need help with this homework thinking question (about opportunity costs) Sigmund Freud, in his 1930 essay Civilization and Its Discontents, argues that thesublimation of sexual desire leads to the mental energy required for advances in civiliza-tion: science, art, politics, etc. He writes,“Sublimation of instinct [such as sexual instinct] is an especially conspicu-ous feature of cultural development; it is what makes it possible for higherpsychical activities, scientific, artistic, or ideological, to play such an impor-tant part in civilized life... it is impossible to overlook the extent to whichcivilization is built up upon a renunciation of instinct...” How would an economist phrase Freud’s argument, in terms of opportunity costs? Might this explain the development of monogamous marriage as an institution?The following table describes the productionpossibilities of two cities in the country of Baseballia:Pairs of RedSocks per Workerper HourPairs of WhiteSocks per Workerper HourBoston 3 3Chicago 2 1a. Without trade, what is the price of white socks (interms of red socks) in Boston? What is the price inChicago?b. Which city has an absolute advantage in theproduction of each color sock? Which city has acomparative advantage in the production of eachcolor sock?c. If the cities trade with each other, which color sockwill each export?d. What is the range of prices at which mutuallybeneficial trade can occur?