The market equilibrium is represented by the equation 3p +7X-23 where p unit price $/unit and X thousands of units. when the unit price 2.35 $/unit and the unit cost is 1.80 $/unit and the fixed costs equal to $28000. a) Determine the unit price and production level to maximize revenue b) Determine the unit price and production level to maximize profit
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- The production of store-brand medicine happens in a perfectly competitive market. For store-brand albuterol inhalers, the long-run average costs are constant at $57. Demand by retailers is given by: QD = 630 − 0.38P. In addition to those production costs, producers incur costs related to labeling their products to inform consumers that the product is comparable to name-brand inhalers. The labeling and related research costs is estimated to be equal to 1.8Q. Is there a market failure here, and if so, which one? Why or why not? What would be the quantity of inhalers produced if no labeling were required?The total revenue of a purely competitive firm from selling 6 units of output is $48. Based on this information, the unit price of the output must be Multiple Choice $8. $42. $288. $54.You are the owner of QuantCrunch Corporation, a company that recently spent $15,000 to develop a statistical software package. To date, you only have one client. A recent internal study revealed that this client’s demand for your software is Qd = 300 – 0.2P and that it would cost you $1,000 per unit to install and maintain software at this client’s site. Your assignment is to construct a report that compares (1) the profit that results from charging this client a single (profit-maximizing) per-unit price with (2) the profit that results from charging $1,450 for the first 10 units and $1,225 for each additional unit of software purchased. Answer the following questions in your report: What type of pricing strategy is (1)? What type of pricing strategy is (2)? Compare at least three strategies discussed in this module (including 1 and 2) in making your recommendation? Show your calculations.
- A store that sells maize meal discovers that when the price of 1kg maize meal Is R24 per kilogram, the quantity demanded is 306 kgs per week. When the price decreases to R21 per kg, then the sales increase to 340 kgs per week.You’re the manager of global opportunities for a U.S. manufacturer, who is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, Philippines, and Singapore as described next in the table below. The product sells for $10 and has unit costs of $8. If you can enter only one market, and the cost of entering the market (regardless of which market you select) is $250,000, should you enter one of these markets? If so, which one? If you enter, what is your expected profit?You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer’s phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qd = 250 − 5P and the market supply (including taxes) is QS = 4P − 110 (both in millions), where P is the monthly price of the telecommunication services.The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of QS = 4.171P − 110. How much money per unit would a typical consumer save…
- You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer’s phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qd = 300 − 4P and the market supply (including taxes) is Qs = 3P − 120 (both in millions), where P is the monthly price of telecommunication services. The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of Qs = 3.2P − 120. How much money per unit would a typical consumer save each…You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer’s phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qd = 300 - 4P and the market supply (including taxes) is QS = 3P - 120 (both in millions), where P is the monthly price of the telecommunication services.The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of QS = 3.3P - 120. How much money per unit would a typical consumer save…You have been appointed the new manager for Ghana Airways Company Limited, aninternational airline company that flies from the Kotoka International Airport in Accrato Heathrow Airport in London every day. The airline is described as a monopolist andhas the possibility of discriminating between its Business and Economy Travelers. Tohelp you price your services appropriately to maximize profit, you engaged aneconomist who estimated the demand function for both Economy and BusinessTravelers as: Q1 = 24 – 0.2P1 Economy Travelers Q2 = 10 – 0.05P2 Business Travelers Where Q1 and Q2 are the respective numbers of Economy and Business Travelers and P1 and P2are their respective fares (in GH¢). If the Total Cost (TC) of this airline company for flying thesetwo categories of travelers is given as TC = 35 + 40Q, where Q = Q1 + Q2 What can you say about the fares, number of travelers and profit of Ghana Airways CompanyLimited, with and without discrimination?
- 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 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?Assume there are two companies in the region, A and B. You currently work for Company B. Both companies service the entire market and have a combined market share of 100%. At the start of the period, A and B split the market evenly with 50% share each. However, A has adopted a new customer retention tool and has projected the following switching matrix. TO FROM A B A 0.8 0.2 B 0.3 0.7 Given this switching matrix. 1 - What is the projected Market Share for Company A next period? 2- Assume that each customer has a profitability of $30 each year. There are 10,000 customers in the market. How much profit per year, in the long run and assuming no other costs or changes to the market, can we assume that B will lose due to this new technology compared to their prior position?