You are a manager of a monopolistically competitive firm that is currently charging a price of $5 for its product and, at this price you are selling 52,000 units of your product. At this price and quantity combination, you have estimated your own price elasticity of demand to be -2.0 and you have an advertising elasticity of 0.25. What is the optimal amount for you to spend on advertising?
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Economics
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- How does advertising intend to shift demand? How does it intend to change the elasticity of demand?Exercise 5.1 Describe with the help of graphs the long-term equilibrium of a monopolistically competitive market. What is the relationship between price and ATC? And between the price and the MC?MIcro: The company “Mike Broonie” operates in the market of monopolistic competition. Just now, the company weekly produces and sells 100 units of pillows for £12 each. The average total cost to produce the pillows doesn’t depend on the output, being £10 per unit. Having evaluated the price elasticity of demand for its product, the company concluded that demand is inelastic at the moment. a. What indicator characterizes the price elasticity of demand? What formula (or formulas) one can use to calculate this indicator? Choose any number for this indicator that, under the conditions specified in the case, could characterize the price elasticity of demand for the company “Mike Broonie”. b. Imagine that the owner of the company wants to increase the price of the company’s product. How will it affect sales, revenue, and profit (will each of these indicators increase, decrease, or remain the same)? Give here theoretically substantiated forecast. To increase the number of points…
- Exercise 5.3 Sticky Stuff produces cases of taffy in a monopolistically competitive market. The inverse demand curve for its product is P = 50 - Q, where Q is in thousands of cases per year and P is dollars per case. Sticky Stuff can produce each case of taffy at a constant marginal cost of $10 per case and has no fixed cost. Its total cost curve is therefore TC = 10Q. a) To maximize profit, how many cases of taffy should Sticky Stuff produce each month? b) What price will Sticky Stuff charge for a case of taffy? c) How much profit will Sticky Stuff earn each year? d) In reality, firms in monopolistic competition generally face fixed costs in the short run. Given the information above, what would Sticky Stuff's fixed costs have to be in order for this industry to be in long-run equilibrium? Explain.Suppose new firms enter a monopolistically competitive market. What is the effect of new firms entering the market from the perspective of the firms that were already in the market? Question 11Answer a. Positive supply shock b. Positive demand shock c. No effect d. Negative supply shock e. Negative demand shockWeek #8 Assignment: 2. Sub-subje Monopolistic Competitor What is the profit - maximizing output level? What is the firm's proft - maximizing price? Is this firm productively efficient? Will the firm eam a profit or loss at the profit - maximizing output level? How much is that profit or looss? Based on this information, do you think fims will enter or exit this industry? Why or whynot?
- Exercise 5.5 In this unit we have seen that monopolistically competitive firms could increase the amount they produce and reduce the ATC of production. Why don't they?You are a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. P = MC, P > ATCP > MC, P = ATC Illustrating with graph(s), can the firm possibly be maximising profit? If not, what should it do to increase profit? If the firm is profit-maximising, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? PLZ EXLAIN MORE DETAILS AND WRITE IT CLEARLY THX!!!The manager of a convenience store competes in a monopolistically competitive market and buys cola from a supplier at a price of $1.25 per liter. The manager thinks that because there are several supermarkets nearby, the demand for cola sold at her store is slightly more elastic than the elasticity for the representative food store reported in Table (which is −3.8). Based on this information, she perceives that the elasticity of demand for cola sold by her store is −4. What price should the manager charge for a liter of cola to maximize profits?
- What can be used to influence and shape consumers’ intangible preferences in order to differentiate products within a monopolistically competitive market? Group of answer choices pricing strategy product placement advertisinglesson business math : pls do in the piece paper with a4 paper Question 4: Given the demand function: ? = 200 − 2? − ?? + 0.1?2 Where P = 10, PA= 15 and Y = 100, find: a. The price elasticity of demand b. The cross-price elasticity of demand; substitute or complementary goods? c. The income elasticity of demand; inferior, normal, or superior goods? Unconstrained Optimization: Profit Maximization Question 5: A firm is a monopolistic producer of two goods G1 and G2. The prices are related to quantities Q1 and Q2 according to the demand functions. ?1 = 50 − ?1 ?2 = 95 − 3?2 If the total cost function is: ?? = ?12 + 3?1?2 + ?22 Find the values of Q1 and Q2 which maximize π and deduce the corresponding prices. Lagrange Multipliers Question 6: Use Lagrange multipliers to find the maximum value of: ? = 4?? Subject to the constraint: ? + 2? = 40 Definite Integration: Investment Flow Question 7: If the investment flow is: ?(?) = 9000√? Calculate: a. The capital formation from the end of…1- You own a hamburger franchise and are planning to shut down operations for the day, but you are left with 12 buns, 18 defrosted beef patties, and 14 opened cheese slices. Rather than throw them out, you decide to use them to make burgers that you will sell at a discount. Plain burgers each require 1 beef patty and 1 bun, double cheeseburgers each require 2 beef patties, 1 bun, and 2 slices of cheese, while regular cheeseburgers each require 1 beef patty, 1 bun, and 1 slice of cheese. How many of each should you make? plain burgers double cheeseburgers regular cheeseburgers 2- The Enormous State University History Department offers three courses—Ancient, Medieval, and Modern History—and the chairperson is trying to decide how many sections of each to offer this semester. The department is allowed to offer 48 sections total, there are 5,400 students who would like to take a course, and there are 65 professors to teach them. Sections of Ancient History have 100 students each,…