Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Question
Chapter 7, Problem 45P
a)
Summary Introduction
To determine: The profit-maximizing price of Product M when the demand function is constant elasticity and also linear.
Non-linear programming (NLP):
Non-linear programming (NLP) is used in complex optimization problems where the objectives or constraints or sometimes both are non-linear functions of the decision variables. A model can be termed as non-linear for more than one reason.
a)
Expert Solution
Explanation of Solution
Model
Formula:
Solver input:
b)
Summary Introduction
To determine: The profit-maximizing price of Product M when the demand function is constant elasticity and also linear for an additional profit of $800.
b)
Expert Solution
Explanation of Solution
Model
Formula:
Solver input:
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Students have asked these similar questions
A firm's short-run production function is given with Q(K, L) = L0.2* K2 . Capital is fixed with K=3. The price of capital is r = 0.1 and the price of labour is w = 4 The price of the final output is p = 8
a) Do you think it is possible to depict this production function with an isoquant? Justify your answer by explaining the concept of an isoquant.
b) Calculate the optimum quantity of labour the firm should use if it wants to maximize its profit. Also calculate the output produced and the corresponding profit.
2.
A firm makes two products, Y and Z. Each unit of Y costs $10 and sells for $40. Each unit of Z costs $5 and sells for $25. If the firm's goal is to maximize profit, what would be the appropriate objective function?
Select one:
a.
Maximize profit Z = $10Y + $25Z
b.
Maximize profit Z = 0.25Y + 0.20Z
c.
Maximize profit Z = $40Y + $25Z
d.
Maximize profit Z = $50(Y + Z)
e.
Maximize profit Z = $30Y + $20Z
(1) When chef Paolo prices his speciality ‘pizza-n-all’ meal at £25, he sells 20 meals a day.
When he prices his pizza meal at £22, he sells 21 meals a day.
Suppose Paolo reduces his price from £25 to £22. Explain the impact of the price reduction on the revenue he receives from the first 20 meals he sells.
Total Revenue – Price X Quantity.
Revenue @ £25 = £25 X 20 = £500.
Revenue @ £22 = £25 X 20 = £440
The impact of the price reduction is a reduction in total revenue of £60 (-12%) over the first 20 meals that he sells.
Calculate the additional revenue generated from the additional meals he sells when he lowers his price to £22.
Total Revenue = Price X Quantity.
Total Revenue @ £22 = £22 X 21 = £462.
Additional Revenue = Revenue @ £25 – revenue @ £22 = £500 - £462 = -£38.
Calculate the marginal revenue Paolo receives from the 21st meal. How does that amount relate to the amounts you calculated in (a) and (b)? (3%)
Suppose Paolo reduces his price from £25 to £22. Explain…
Chapter 7 Solutions
Practical Management Science
Ch. 7.3 - Prob. 1PCh. 7.3 - Prob. 2PCh. 7.3 - Pricing Decisions at Madison The Madison Company...Ch. 7.3 - Prob. 4PCh. 7.3 - Prob. 5PCh. 7.3 - Prob. 6PCh. 7.3 - Prob. 7PCh. 7.3 - Prob. 8PCh. 7.3 - Prob. 9PCh. 7.3 - Prob. 10P
Ch. 7.3 - Prob. 11PCh. 7.3 - Prob. 12PCh. 7.3 - Prob. 13PCh. 7.3 - PRICING SUITS AT SULLIVANS Sullivans is a retailer...Ch. 7.3 - Prob. 15PCh. 7.4 - Prob. 16PCh. 7.4 - Prob. 17PCh. 7.4 - Prob. 18PCh. 7.4 - Prob. 19PCh. 7.4 - Prob. 20PCh. 7.4 - Prob. 21PCh. 7.4 - Prob. 22PCh. 7.4 - Prob. 23PCh. 7.5 - Prob. 24PCh. 7.5 - Prob. 25PCh. 7.5 - Prob. 26PCh. 7.5 - Prob. 27PCh. 7.6 - Prob. 28PCh. 7.6 - Prob. 29PCh. 7.6 - Prob. 30PCh. 7.6 - Prob. 31PCh. 7.6 - Prob. 32PCh. 7.6 - Prob. 33PCh. 7.6 - The method for rating teams in Example 7.8 is...Ch. 7.7 - Prob. 35PCh. 7.7 - Prob. 36PCh. 7.7 - Prob. 37PCh. 7.7 - The stocks in Example 7.9 are all positively...Ch. 7.7 - Prob. 39PCh. 7.7 - Prob. 40PCh. 7.7 - Prob. 41PCh. 7.7 - Prob. 42PCh. 7.8 - Given the data in the file Stock Beta.xlsx,...Ch. 7.8 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Another way to derive a demand function is to...Ch. 7 - Prob. 48PCh. 7 - If a monopolist produces q units, she can charge...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - A beer company has divided Bloomington into two...Ch. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - You have 50,000 to invest in three stocks. Let Ri...Ch. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Based on Grossman and Hart (1983). A salesperson...Ch. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 86PCh. 7 - Prob. 1.1CCh. 7 - Prob. 1.2CCh. 7 - Prob. 1.3CCh. 7 - Prob. 1.4C
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