MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 19PAA
To determine
Linear regression results of all seven states and their respective interpretations.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Pretend that you are working for Del Monte in the area of canned vegetables and that Del Monte has a system that uses data analytics. One of your major competitors is Green Giant vegetables. You are particularly interested in analyzing canned green beans. A portion of Del Monte’s data analytic system contains the following variables:
Sales of various can sizes; prices of various sized cans; types of stores where green beans are sold; shelf locations of green beans in various types of stores; various promotions pertaining to green beans.
Also assume that this analytic system also has this information for Green Giant beans.
Explain for what types of decisions could this system be used concerning Del Monte’s Green Beans. Also address the possibility of competitive analyses pertaining to Green Giant Beans.
The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: $240, Camera B Price: $300). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products.
The store wishes to establish a pricing policy to maximize revenue from these products.
A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model:
NA = 195 - 0.5PA + 0.35PB
NB = 300 + 0.06PA - 0.5PB
Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10.
Max revenue occurs at Camera A price of $ -
Max revenue occurs at Camera B price of $ -
Suppose the Kalamazoo Brewing Company (KBC) currently sells its microbrews in a seven-state area: Illinois, Indiana, Michigan, Minnesota, Mississippi, Ohio, and Wisconsin. The company’s marketing department has collected data from its distributors in each state. This data consists of the quantity and price (per case) of microbrews sold in each state, as well as the average income (in thousands of dollars) of consumers living in various regions of each state. The data for each state are available via the link below--please note there are multiple tabs at the bottom of the spreadsheet, each refers to one of the seven states selling the Kalamazoo Brewing Company’s microbrews.Excel Data FileAssuming that the underlying demand relation is a linear function of price and income, use your spreadsheet program to obtain least squares estimates of Wisconsin’s demand for KBC microbrews.Instruction: If the estimate is negative, enter a negative number (-) in the equation. Enter your responses…
Chapter 3 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
Ch. 3 - Prob. 1CACQCh. 3 - The demand curve for a product is given by...Ch. 3 - Prob. 3CACQCh. 3 - Suppose the own price elasticity of demand for...Ch. 3 - Suppose the cross-price elasticity of demand...Ch. 3 - You are the manager of a firm that receives...Ch. 3 - A Quant jock from your firm used a linear demand...Ch. 3 - Prob. 8CACQCh. 3 - Prob. 9CACQCh. 3 - Prob. 10CACQ
Ch. 3 - Prob. 11PAACh. 3 - Prob. 12PAACh. 3 - For the first time in two years, Big G (the cereal...Ch. 3 - Prob. 14PAACh. 3 - You are a division manager at Toyota. If your...Ch. 3 - You are a manager in charge of monitoring cash...Ch. 3 - As newly appointed Energy Czar. your goal is to...Ch. 3 - As the owner of Barneys Broilers—a fast-food...Ch. 3 - Prob. 19PAACh. 3 - With milk sales sagging of late. The Milk...Ch. 3 - Prob. 21PAACh. 3 - Prob. 22PAACh. 3 - Prob. 23PAA
Knowledge Booster
Similar questions
- The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: 230, Camera B Price: 310). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA = 192 - 0.5PA + 0.25PB NB = 305 + 0.08PA - 0.6PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max profit occurs at Camera A price of $______. Max profit occurs at Camera B price of $______.arrow_forwardAn auto part manufacturer sells six different parts to automobile companies: spot lights (A), break lights (B), headlights (C), thermostat (D), fan ditch (E), and battery (F). Demand is expected to be within 2,000, 1,500, 1,800, 1,200, 1,000 and 1,000 units of each of the auto parts, respectively. The table that follows summarizes the revenues and material costs for each product: Auto Parts Produced A B C D E F Price per Unit 200 120 180 200 430 260 Material Cost per Unit 35 25 40 45 170 60 Each of these auto parts needs to be tested before being sold. Specifically, there are three different tests the protocol requires each part passes, before completing the quality check. Appropriate testing equipment is required for each test: T1, T2 and T3. Equipment T1 and T2 are available 100 hours per week each, while T3 is available only 80 hours per week. The time (in minutes) required per device for each of the three tests is…arrow_forwardThe Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and price (P) of each model. NA = 185 - 0.7PA + 0.55P, Ng = 282 + 0.08PA - 0.7PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is Pa = $230 and the price of model B is Pa = $320. $ 93318 (b) Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. PA = 270 PB = 390arrow_forward
- A local firm produces three types of Pizza, for delivery to homes in the area. The owners have completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: (Quantities are per week). Price Pizza A (Qd) Pizza B (Qd) Pizza C (Qd) 12 800 0 100 11 840 0 200 10 880 400 300 9 920 800 400 8 960 1200 500 7 1000 1600 600 6 1040 2000 700 5 1080 2400 800 Calculate price elasticity demand for all three pizzas over the price range £9 to £10. Why does a firm want to know cross elasticity demand?arrow_forwardJohnny Rockabilly has just finished recording his latest CD. The company can produce the CD with no fixed cost and a variable cost of $18 per CD. His record company's marketing department determines that the demand for the CD is as follows: Complete the following table by computing total revenue for each quantity listed and marginal revenue for each 5,000 increase in the quantity sold. Price Number of CDs Total Revenue Marginal Revenue (Dollars) (Dollars) (Dollars) 30 10,000 28 15,000 26 20,000 24 25,000 22 30,000 20 35,000 Profit is maximized at a quantity of $? CDs and a price of $ ? . This results in a profit of $ ? If you were Johnny's agent, you would advise Johnny to demand a recording fee of from the record company. $ ?arrow_forwardAn analyst for FoodMax estimates that the demand for its “Brand X" potato chips is given by: InQx = 10.34 – 3.2 In Px+ 4Py+ 1.5 In Ax where Qx and Px are the respective quantity and price of a four-ounce bag of Brand X potato chips, Pyis the price of a six-ounce bag sold by its only competitor, and Ax is FoodMax's level of advertising on brand X potato chips. Last year, FoodMax sold 5 million bags of Brand X chips and spent $0.25 million on advertising. Its plant lease is $2.5 million (this annual contract includes utilities) and its depreciation charge for capital equipment was $2.5 million; payments to employees (all of whom earn annual salaries) were $0.5 million. The only other costs associated with manufacturing and distributing Brand X chips are the costs of raw potatoes, peanut oil, and bags; last year FoodMax spent $2.5 million on these items, which were purchased in competitive input markets. Based on this information, what is the profit-maximizing price for a bag of Brand X…arrow_forward
- You are a pricing analyst for QuantCrunch Corporation, a company that sells a statistical software package. To date, you only have one client. A recent internal study reveals that this client’s inverse demand for your software is P=1500-5Q and that it would cost you $1,000 per unit to install and maintain software at this client’s site. What is the profit that results from two-part pricing? (Hint: set the per-unit price for each unit of the software installed and maintained equal to marginal cost; and charge a fixed “licensing fee” that extracts all consumer surplus from the client)arrow_forwardSubstitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashers, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashers decreases by 8%, the quantity of raskels sold increases by 6% and the quantity of kipples sold decreases by 8%. Your job is to use the cross-price elasticity between splishy splashers and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the…arrow_forwardJanet's Bouquets stocks fresh-cut flower bouquets on a weekly basis that sell for $60 each and have a purchase cost of $30 per dozen. Unsold week-old bouquets are reduced in price to $20 each and are always completely sold without affecting the current week's demand for fresh-cut bouquets. Janet, the owner of the flower shop, estimates weekly demand characteristics for fresh-cut bouquets as follows: Demand (bouquets) 75 80 85 90 95 Required: Demand Probability 0.1 0.2 0.3 0.3 0.1 How many bouquets should Janet's Bouquets order each week to maximize net income? Support your decision by preparing an appropriate payoff table. Janet's Bouquets should purchase bouqetsarrow_forward
- A large restaurant chain sells hamburgers and French fries as separate products. There are 2 million consumers across all of the restaurant's locations. Of those, 1 million consumers value hamburgers at $5 and French fries at $1, while the other 1 million value hamburgers at $3 and French fries at $3. The restaurant is considering three pricing strategies: Sell hamburgers for $5 and French fries for $3. Sell hamburgers for $4 and French fries for $2 Sell hamburgers and French fries as one product combined for $6. Calculate the restaurant's profit under each strategy. Which of these pricing strategies should the restaurant adopt to maximize its profits?arrow_forwardSubstitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gummies, frizzles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies decreases by 4%, the quantity of frizzles sold decreases by 4% and the quantity of kipples sold increases by 3%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…arrow_forwardClubs often do some buying and selling during fundraisers, working with a vendor to make mugs, T-shirts, hoodies etc. that display the club's logo. There can be big savings for bulk orders. DiscountMugS (http://www.discountmugs.com) is an on-line company with this kind of service. Suppose a high school group orders T-shirts for a fundraiser. The table below shows the pricing shown on the webslte. Note that the fixed cost Involved in setting up the printing with the logo is absorbed into the pricing schedule. 576+ 1008+ 2016+ Quantity Cost per T S5.55 $4.90 $4.86 12+ 24+ 36+ 72+ 144+ 288+ $4.73 $4.62 $4.58 $4.42 $4.01 S3.59 a) We have seen problems for which breaking even was the goal, but in the context of fundraising the idea of break-even is not really the point! The goal may be to raise enough funds for, say, the choir to take part in an out of state competition, or for the Odyssey of the Mind team to go to World's. If the club is comfortable charging $8 per T-shirt how many must be…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning