PRIN OF MICROECONOMICS
2nd Edition
ISBN: 9780393914085
Author: coppock
Publisher: Norton, W. W. & Company, Inc.
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Chapter 9, Problem 12SP
To determine
Describe the economic concept that should be used to decide whether to leave or stay through the remainder of the film.
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Imagine that you own one of several popular restaurants in your area. Due to the Covid Pandemic of 2020, all restaurants were forced to close down for two months. You are now allowed to reopen your restaurant to the public. During this time, labor costs were reduced however, overhead such as rent, electricity, etc. was still a large percentage of your total costs. You are facing a dilemma; you are short on funds.
What options should you consider? For example, should you raise menu prices to make up for the lost revenue? Should you lower menu prices to attract more customers? Is your customer volume elastic? If you raise prices and the customer volume falls will the increase in prices compensate for the loss of volume? If it does not, is there some way you can make up the revenue shortfall? If you lower menu prices and revenue falls is there some way you can increase your business revenue?
Explain your reasoning in terms of demand and elasticity.
Round off your final answer to whole #.
A company produces and sells a consumer product and is able
to control the demand by varying the selling price. The approximate relationship between price and demand is
p=45 + 2700/D - 5000/D2 for D > 1
The company is seeking to maximize its profit. The fixed cost is $1,000 and the variable cost is $38 per unit.
What is the number of units that should be produced and sold each month to maximize profit?
You are the chief financial officer for a firm that sells digital music players. Your firm has the following average-total-cost schedule: Your current level of production is 600 devices, all of which have been sold. Someone calls, desperate to buy one of your music players. The caller offers you $550 for it. Should you accept the offer? Why or why not. Single line text.
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