The constant price elasticity of demand for cigarettes has been estimated to be-0.5. To reduce smoking by 25%, approximately how much tax needs to be added to a $1 pack? Selected Answer: $1.00
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- d = annual demand for a product in units p = price per unit Assume that a firm accepts the following price-demand relationship as being a realistic represenation of its market: d = 800 - 10p; where p must be between $20 and $70. How many units can the firm sell at the $20 per unit price? And $70 per unit price? By how many units does a $1 increase decrease the demand?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?A small countertop installing company hires you to estimate their customers weekly demand function for marble (per sq ft). The demand function is as follows: Qm=5000-30Pm +20Pg + 0.05Inc m=marble, g= granite, inc = avg disposable income for home improvements in the surrounding area. Current prices: marble = 40, granite = 25 and disposible income = 5000 Suppose during the supply change shortage the price of marble triples to $120 Determine the elasticity of demand at the new market price for marble
- The price for cigarettes sold by Big Tobacco Co Ltd was6.00 per packet in March 2018. During the month of March, the consumption of cigarettes was 1000 packets. However, the Board of Directors of Big Tobacco Co Ltddecided to increase the price by 25% during the month of April. As a manager you noted that price elasticity of demand was 0.8. As a manager Big Tobacco Co Ltd: A. Advise your management of the strategy that could be adopted by your firm to maintain sales. B. Also, advise your government on recommendedinterventions in the cigarette market.Currently, the exchange rate is 100 yen per dollar. InJapan, we sell a product that costs $5 to produce for 700yen. The product has an elasticity of 3. For exchange ratesvarying from 70 to 130 yen per dollar, determine the optimalproduct price in Japan and the profit in dollars. Assume alinear demand curve. Current demand is assumed to equal100.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 function
- 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. -1.71Supply fucntion: QS=200P-700 Demand function: Qd=3000-100p If a goverment want to reduce the quantity of units sold to 500, what is the price per unit tax?qd = 240 - 3p, where q is the quantity demanded and p is the price. The supply curve is given by qs = p - 52.If a specific (or per-unit) tax of $20 is imposed on sellers, how much tax revenue does the government raise in this market? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- The management believes that every 9% decrease in the selling price of one of the company's products would lead to a 15% increase in the product's total unit sales. The product's variable cost is ₱11.80 per unit. The product's price elasticity of demand is closest to: a. -1.12 b. -1.34 c. -1.61 d. -1.48 The product's profit-maximizing price is closest to: a. ₱31.19 b. ₱46.07 c. ₱106.31 d. ₱36.28Suppose that in Australia the price elasticity of steel demand of -1.5 and the price elasticity of steel supply is 1.2. If a tax of $50 per tonne of steel is applied, then: a. The tax burden on consumers will be greater than the tax burden on suppliers. b. The tax burden on suppliers will be greater than the tax burden on consumers. c. The tax burden on consumers will be equal to the tax burden on suppliers. d. The steel price is unlikely to be substantially affected.Given: Qd = 800 - 4P Qs = 8P - 400 What is the Arc Elasticity where P = 150 and P = 100?