You are the Managing Director of Ghana Clins Ltd., a firm that supplies tissue paper for cars. Suppose your marketing department has compiled the following data on the price and quantity of tissue paper sold last month at 10 outlets in the Central Region of Ghana:ObservationQuantityPrice11804752590400343045042505505275575672037576603758490450970040010210500 Estimate the demand function for your firm. Interpret your answer by commenting on the marginal effect of a change in the product’s priceHow many units of your product will be demanded if the price is GHC 350.00?Given that your consultants have estimated the supply function to be: What will be the equilibrium price and quantity of your product?Estimate the elasticity of demand for your product at the equilibrium price and quantity. Interpret your answer. Based on the price elasticity of demand, what will you advise management of GhanaClins to do to the price in order to increase total sales?Considering the price elasticity of demand facing your product, can you conveniently push any tax to your consumers? Explain your answer. If the government of Ghana orders that the price of your product should not be sold above GH¢300.00, what type of price legislation is it? Explain why such price legislation will be socially expedient but economically inexpedient.

The relationship between a customer's quantity demand and a product's pricing is described by the…

Answered: You are the Managing Director of Ghana…

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 6MC

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You are the Managing Director of Ghana Clins Ltd., a firm that supplies tissue paper for cars. Suppose your marketing department has compiled the following data on the price and quantity of tissue paper sold last month at 10 outlets in the Central Region of Ghana:

Observation	Quantity	Price
1	180	475
2	590	400
3	430	450
4	250	550
5	275	575
6	720	375
7	660	375
8	490	450
9	700	400
10	210	500

Estimate the demand function for your firm. Interpret your answer by commenting on the marginal effect of a change in the product’s price
How many units of your product will be demanded if the price is GHC 350.00?
Given that your consultants have estimated the supply function to be: What will be the equilibrium price and quantity of your product?
Estimate the elasticity of demand for your product at the equilibrium price and quantity. Interpret your answer. Based on the price elasticity of demand, what will you advise management of GhanaClins to do to the price in order to increase total sales?
Considering the price elasticity of demand facing your product, can you conveniently push any tax to your consumers? Explain your answer.

If the government of Ghana orders that the price of your product should not be sold above GH¢300.00, what type of price legislation is it? Explain why such price legislation will be socially expedient but economically inexpedient.

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