PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 5RQ
To determine
The usage of ‘smart for one but dumb for all’.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The American Baker’s Association reports that annual sales of bakery goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent certain types of cancer. You are the manager of a bakery that produces and packages gourmet bran muffins, and you currently sell bran muffins in packages of three. However, as a result of this new report, a typical consumer’s inverse demand for your bran muffins is now P = 3 − 0.5Q.If your cost of producing bran muffins is C(Q) = 1.0Q, determine the optimal number of bran muffins to sell in a single package and the optimal package price.Instructions: Enter your response for the optimal package price rounded to two decimal places.Optimal package size: units
Optimal package price: $
The American Baker’s Association reports that annual sales of bakery goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent certain types of cancer. You are the manager of a bakery that produces and packages gourmet bran muffins, and you currently sell bran muffins in packages of three. However, as a result of this new report, a typical consumer’s inverse demand for your bran muffins is now P = 8 – 1.5Q. If your cost of producing bran muffins is C(Q) = 0.5Q, determine the optimal number of bran muffins to sell in a single package and the optimal package price.
The Brady family have a weekly budget of €200 to be spent on Food (F) and Other Goods
(OG), which are initially equally priced at €10 and €20 per unit, respectively. Given recent
inflation, the government has concerns about the ability of large families to afford an adequate
diet for children. Due to this, the government announces that when Food consumption exceeds
12 units, the government will subsidise food consumption so that the price per subsequent unit
will be €5 for any family.
With Food on the horizontal axis, show the family’s pre and post-scheme budget line. Can we
definitively determine the family’s utility maximising consumption bundle as a result of the
government scheme?
Chapter 3 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
Knowledge Booster
Similar questions
- ) It is an established fact in economics that for goods which are described as inferior goods, when incomes of consumers increase, consumers tend to reduce their consumption of such goods and rather patronize goods which would normally provide higher satisfaction .Suppose in Ghana, gari is seen as an inferior good and incomes of low income earners rise substantially as result of the introduction of a new incomes policy. If a researcher decides to undertake a study to verify the general preposition that as incomes rise, the consumption of inferior goods falls. 1.which type of economic study and what analysis is this? Justify your answer.arrow_forwardAhmed is an agent for Bader for maintaining Bader’s antique cars collection, including sale and purchase of antique cars. Ahmed has had this position for several years, but recently Ahmedhas developed a cocaine habit. He recently sold one of Bader’s cars and kept some of the money himself to buy some cocaine. Soon thereafter, Ahmed was declared bankrupt. The government then notified Ahmed that he had sold the maximum allowable number of cars in a year without getting a dealer’s license. Shortly thereafter, Bader was on a secluded island and died, which no one knew about until 2 weeks later. Discuss the effect of these events on the existence of the agency.arrow_forwardDescribe this graph in words and in terms of the fisher effectarrow_forward
- Suppose a person can work up to 80 hours per week at a pre-tax wage of $20 per hour but faces a constant 20% payroll tax. Assume that under these conditions the person maximizes utility by choosing to work 50 hours each week. The government proposes a negative income tax so that everyone receives $300 per week regardless of how much they work. To pay for the negative income tax, the payroll tax would be increased to 50%. Using the labor-leisure model, graphically show whether a person would be better off if the negative income tax is adopted and indicate whether hours worked increases or decreases due to the policy.arrow_forwardANSWER THIS INTUITIVELYarrow_forwardYou are the manager in charge of global operations at BankGlobal – a large commercial bank that operates in a number of countries around the world. You must decide whether or not to launch a new advertising campaign in the U.S. market. Your accounting department has provided the accompanying statement, which summarizes the financial impact of the advertising campaign on U.S. operations. In addition, you recently received a call from a colleague in charge of foreign operations, and she indicated that her unit would lose $8 million if the U.S. advertising campaign were launched. Your goal is to maximize BankGlobal’s value. Pre-Advertising Campaign Post-Advertising Campaign Total Revenues $18,610,900 $31,980,200 Variable Cost TV Airtime 5,750,350 8,610,400 Ad development labor 1,960,580 3,102,450 Total variable costs 7,710,930 11,712,850 Direct Fixed Cost Depreciation – computer equipment 1,500,000 1,500,000 Total direct fixed cost 1,500,000 1,500,000…arrow_forward
- It is an established fact in economics that for goods which are described as inferior goods, when incomes of consumers increase, consumers tend to reduce their consumption of such goods and rather patronize goods which would normally provide higher satisfaction .If a researcher decides to undertake a study to verify the general preposition that as incomes rise, the consumption of inferior goods falls, which type of economic study and what analysis is this? Justify your answer.arrow_forwardSuppose you have been hired by a research firm trying to understand the market for Widgets (a hypothetical product). Your analysis of the data indicates that the Demand curve for Widgets is estimated to be linear and given by equation Qd = 150 – 3P and the Supply curve for Widgets appears to be linear as well and is estimated as Qs = 2P – 20. Graphically draw these two curves, labeling all relevant points (such as intercepts for each line) on the horizontal and vertical axes.arrow_forwardYou are a pricing manager at Argyle Inc.—a medium-sized firm that recently introduced a new product into the market. Argyle’s only competitor is Baker Company, which is significantly smaller than Argyle. The management of Argyle has decided to pursue a short-term strategy of maximizing this quarter’s revenues, and you are in charge of formulating a strategy that will permit the firm to do so. After talking with an employee who was recently hired from the Baker Company, you are confident that (a) Baker is constrained to charge $10 or $20 for its product, (b) Baker’s goal is to maximize this quarter’s profits, and (c) Baker’s relevant unit costs are identical to yours. You have been authorized to price the product at two possible levels ($5 or $10) and know that your relevant costs are $2 per unit. The marketing department has provided the following information about the expected number of units sold (in millions) this quarter at various prices to help you formulate your decision: Argyle…arrow_forward
- You are a pricing manager at Argyle Inc.—a medium-sized firm that recently introduced a new product into the market. Argyle’s only competitor is Baker Company, which is significantly smaller than Argyle. The management of Argyle has decided to pursue a short-term strategy of maximizing this quarter’s revenues, and you are in charge of formulating a strategy that will permit the firm to do so. After talking with an employee who was recently hired from the Baker Company, you are confident that:(a) Baker is constrained to charge $10 or $20 for its product,(b) Baker’s goal is to maximize this quarter’s profits, and(c) Baker’s relevant unit costs are identical to yours.You have been authorized to price the product at two possible levels ($5 or $10) and know that your relevant costs are $2 per unit. The marketing department has provided the following information about the expected number of units sold (in millions) this quarter at various prices to help you formulate your decision:…arrow_forwardBart and Lisa are both optimizing consumers in the market for shirts and hats, where they pay $100 for a shirt and $50 for a hat. Bart buys 8 shirts and 4 hats, while Lisa buys 6 shirts and 12 hats. From this information, ignoring the minus sign, we can infer that Bart's marginal rate of substiution is _________ hats per shirt, while Lisa's is __________ hat's per shirtarrow_forward. As the owner of Barney’s Broilers—a fast-food chain—you see an increase in the demand for broiled chicken as consumers become more health conscious and reduce their consumption of beef and fried foods. As a result, you believe it is necessary to purchase another oven to meet the increased demand. To finance the oven you go to the bank seeking a loan. The loan officer tells you that your revenues of $750,000 are insufficient to support additional debt. To qualify for the loan, Barney’s Broilers’s revenue would need to be $50,000 higher. In developing a strategy to generate the additional revenue, you collect data on the price (in cents) per pound you charge customers and the related quantity of chicken consumed per year in pounds. This information is contained in the file called Q18.xls available online at www.mhhe.com/baye8e It is also available in the ‘Assignments’ section of the class Blackboard page in ‘MBA 6150 HW 3 Q18 data set’ file. Use that data and a log-linear demand…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher: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
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education