Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 2, Problem 20PAA
To determine
To explain:
The relation between memory modules and desktop systems.
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Viking Publishing House observed that in the recent years books on nature conservation and climate change have been very popular. As a matter of fact, Jane Goodall's latest book, "The Book of Hope: A Survival Guide for an Endangered Planet" has been a best-seller and Viking estimates the following demand curve for the book:
P = 150 - Q
In this equation, P is the price of the book and Q denotes yearly sales in thousands 20,000 books would be expressed as Q = 20 books. In other words,
Viking estimates that it incurs a cost of $40 for printing and shipping of each book and pays a $10 royalty to Jane Goodall for each book sold.
a. Calculate the profit maximizing OUTPUT and PRICE for this book. Also, calculate the TOTAL PROFITS.
You are the manager of a firm that receives revenues of $20,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is −3, and the cross-price elasticity of demand between product Y and X is −1.6.How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent?Instructions: Enter your response rounded to the nearest dollar. If you are entering a negative number, be sure to use a (−) sign.
$ _____________
What price should you set for a product? This week we’re learning a useful numerical rule.
You’re brought in to consult for a business that currently has a Marginal Cost of $5 for its product.
It sells its product to customers for $9 per unit and the estimated price elasticity of demand is -1.5.
Is the current price optimal? Should it be raised or lowered? To what? Support your answer using the markup pricing equations from the text. (MR = P*(1+(1/elasticity)) combined with the MR=MC rule).
Chapter 2 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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