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 CS, Problem 11CBE
To determine
To explain: The profit maximizing price for each channel.
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Students have asked these similar questions
Problem 07-03 (algo)
Suppose the own price elasticity of market demand for retail gasoline is -0.6, the Rothschild index is 0.4, and a typical gasoline retailer
enjoys sales of $1,800,000 annually. What is the price elasticity of demand for a representative gasoline retailer's product?
Instruction: Enter your response rounded to two decimal places. If entering a negative number, be sure to use the negative (-) sign.
Memo 1
To:Pricing Manager, Tri-State Region
From:Regional Vice President, Tri-State Region
Re:Revenue from EPIX
We recently added the EPIX Movie Channels as part of a new tier of programming for our digital video subscribers. The EPIX channels are sold as an add-on package for $9.75 per month, but we would like to potentially increase our revenue from our subscriber base. Currently we have about 15,059 subscribers, generating monthly revenue of $146,823.Some have suggested we should cut price, as customers tend to be fairly price sensitive for add-on packages. However, in this case, if we lower price for our new subscribers, we really need to cut it to all of our existing subscribers as well. I have some concerns that lowering price will be counter-productive.The marketing department calculated some subscription levels at various price points in this region, and I need you to perform the analysis.…
Consequence
A 40 percent price reduction of The Times led to a 17.5 per
cent increase in its sales.
Price elasticity of demand for The Times: -0.44
Note: The revenue earned by The Times fell from
£169,576 to £134,689!
Competing papers suffered!
Independent suffered most, with a 15.2 percent loss of sales,
indicating a cross-price elasticity of 0.38
Cross-price elasticity for the Guardian was 0.11, and that for
the Daily Telegraph was 0.05.
Implications?
What do you expect would happen to the sales of The Financial
Times?
Why did The Times adopt a strategy of price cut?
Chapter CS Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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- B Product Product A Product B Product C Product D Widget 1 Widget 2 Widget 3 Gadget X Gadget Y Gadget Z 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Required: 17 Calculate the following statistics for both Advertising Expenses and Sales: 18 Advertising Expense Sales Advertising Expense $36,900 $38,000 $33,000 $25,900 $26,000 $42,987 $39,008 $42,009 $19,067 $61,002 C $19,067 $61,002 $135,568,977 $8,268 $36,387 $37,450 $41,935 $27,750 $41,259 Sales $83,025 $85,500 $74,250 $90,650 $91,000 $150,455 $70,214 $75,616 $34,321 $244,008 $34,321 $244,008 $3,378,809,900 19 Minimum 20 Maximum 21 Variance 22 Standard Deviation 23 Mean 24 Median 25 Range 26 1st Quartile 27 3rd Quartile 28 88th Percentile 29 Inner Quartile Range 30 31 What is the correlation between the amount spent on advertising and the sales of a product? 32 33 Correlation 34 35 This number indicates a 36 $58,128 $99,904 $84,263 $209,687 $74,592 $90,913 O relationship between the two variablesarrow_forwardProblem 03-06 (algo) You are the manager of a firm that receives revenues of $40,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross-price elasticity of demand between product Yand X is -1.8. How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 1 percent? Instructions: Enter your response rounded to the nearest dollar. If you are entering a negative number, be sure to use a (-) sign. GAarrow_forwardSubject : Engineering Economics Please write handwritten Answerarrow_forward
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- Given: Desktop Publishing Software Inc, develops and markets software packages for business computers. Although, sales have grown rapidly during recent years, the company's management fears that a recent onslaught of new competitors may severly retard future growth opportunities. Therefore, it believes that the time has come to "get big or get out". The marketing and accounting departments have provided management with the following monthly demand and cost information: P = $1,000 - $1Q TC = $50,000 + $100Q Question 1: Find; Derive the Marginal Revenue & Marginal Cost Equations TR = ___________ MR = ___________ TC = ___________ MC = ___________ Question 2: Profit Maximization: Solve for Monthly Q, P, TR, TC and Profit Q = ___________ P = ___________ TR = __________ TC = __________ PROFIT = __________ Question 3: Revenue Maximization: Solve for monthly Q, P, TR, TC, and Profit Q = ____________ P = ____________ TR = ___________ TC = ___________ Profit = __________arrow_forward(b) Discuss the price elasticity of demand linking with each statement below. Please treat each statement separately. I am running a burger stall with the brand name of M Burger. In Malaysia, burger is a hot selling product and I have been in this business for almost 7 years now. As the market share is huge, there are many competitors in this area of business. Since there is a stiff competition, I will lose 50 percent of my customers if I raise the burger price by as small percentage as 10 percent. (i) (ii) My "Basic Economics Accounting and Management (BEAM)" lecturer have chosen a particular reference book for the class. Since I am taking this as a major subject in my course structure. I have no choice but to purchase the lecturer's preferred book.arrow_forwardProblem 11-23 (algo) You manage a company that competes in an industry that is comprised of 5 equal-sized firms that produce similar products. A recent industry report indicates that the market is fairly saturated, in that a 10 percent industry-wide price increase would lead to a 16 percent decline in units sold by all firms in the industry. Currently, Congress is considering legislation that would impose a tariff on a key input used by the industry. Your best estimate is that, if the legislation passes, your marginal cost will increase by 1 dollar. Based on this information, what price increase would you recommend if the tariff legislation is passed by Congress? Instructions: Enter your response rounded to the nearest penny (two decimal places). $arrow_forward
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