Economics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
Economics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
7th Edition
ISBN: 9780134833392
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 16, Problem 16.3.7PA
To determine

Use of cost plus pricing.

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Briefly explain how the total revenue for a profit-seeking firm is determined.
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6 In 1916, Henry Ford was quoted as saying the following:                               "There are men who will pay $360 for a car who would not pay $440.  We had in round numbers    500,000 buyers of cars on the $440 basis, and I figure that on the $360 basis we can    increase sales to possibly 800,000 cars for the year - less profit on each car, but more cars,    more employment of labor, and in the end we get all the total profit we ought to make."                         If Ford's estimate as correct, what was the price elasticity of demand for his cars?   By how much did total revenue increase?                                                       7 Using the data from question 6, above, write the demand curve equation for Henry Ford's    cars.                                                               8 Using the demand curve equation from question 7, build a graphic to sell Ford cars to the    public in 1916.
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