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Describe any three managerial decisions that can be applied by the manager from the estimated demand function
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- You are the manager of a firm and you are required to optimize the Cobb-Douglas function given the following parameters. The maximum amount of money available to spend is $340 where the price of K=8 and the price of L=4. That is Pk=8 and Pl=4. The function is given as q=K0.4L0.6 . What is the constraint equation?You are the manager of a train company. Recently total sales have been a bit low and you are now considering means to give sales a boost. Market research has shown that currently the price of train tickets is historically low. Market research has also shown that the demand curve for train tickets is downward sloping. You may assume that your company is not a price taker on the market. a) One of your colleagues has suggested that it is important to lower the price of train tickets. In that case, she argues, the demand will increase. Do you agree with her? Explain why. b) She continues her argument by concluding that if the demand goes up, the total value of sales of train tickets should therefore increase. Do you agree with her? Explain why.A competitive firm’s production function is given by y= f(x1,x2)= 4x11/2 + 10x21/2 a) The price of factor 1 is 1, the price of factor 2 is 1, and the price of output is 2. Find the profit-maximizing quantities of x1 and x2? What is the profit-maximizing quantity of output? b) Redo part (a), this time by first deriving the firm’s factor demand functions and the supply function, and then substituting the prices in these functions.
- Bavarian Crystal Works designs and produces crystal wine decanters for export to international markets. The marketing manager of Bavarian Crystal Works estimates the demand curve for each month to be: P=1,000-0.0025Q Where Q is the number of wine decanters produced monthly. Bavarian Crystal Works also pays a lease for its factory and equipment every month in the amount of $1,000,000. Finally, the cost to produce each wine decanter is $200. What quantity would maximize profits? What is the optimal price for Bavarian Crystals to charge?You are the manager of a train company. Recently total sales have been a bit low and you are now considering means to give sales a boost. Market research has shown that currently the price of train tickets is historically low. Market research has also shown that the demand curve for train tickets is downward sloping. You may assume that your company is not a price taker on the market. One of your colleagues has suggested that it is important to lower the price of train tickets. In that case, she argues, the demand will increase. Do you agree with her? Explain why. She continues her argument by concluding that if the demand goes up, the total value of sales of train tickets should therefore increase. Do you agree with her? Explain whyBavarian Crystal Works designs and produces crystal wine decanters for export to international markets. The marketing manager of Bavarian Crystal Works estimates the demand curve for each month to be: P=1,000-0.0025Q where Q is the number of wine decanters produced annually. Bavarian Crystal Works also pays a lease for its factory and equipment every month in the amount of $1,000,000. Finally, the cost to produce each wine decanter is $200. What is the marginal revenue at 40,000 units? If Bavarian Crystals is currently producing 40,000 units would you recommend they increase their production?
- A profit-maximizing, perfectly competitive firm produces a single output from two inputs. The logarithm of the maximized profit function is given by: Int (p,r,w) = a, + a, In w+ a, ln r + a, In p where w, r, and p denote the price of labor, the price of capital, and the price of the firm's output, respectively. a) Derive the supply function and the demand functions for capital and labor. b) What restrictions can you place on the parameters a1, a2, and a3?You are the CEO of Widget World Corporation. Researchers have developed a new electronic widget. The fixed costs to make the widget will be $32,000, and the variable cc will be $145 per widget. The demand function isq =-38p+ 9768. Answer the following questions: 1) Write the expense function (in terms of q) 2) Write the expense function (in terms of p-hint: you will need your demand function) 3) Write the revenue function (in terms of p)Consider the following equation Q = f(K, L) = K0.7 L0.3 Find (d) Equation representing an isoquant and show that it is convex to the origin (e) Elasticity of substitution (f) Output elasticities of factors
- Given for question #1 Cost function C= 3000+6Q Q = 4400 - 200Q - This is the demand function Q= 1600 P = 14 Profit= 22400-12600 = 9800 Please Provide the Answer for question #2 A and B 2. Demand across the two locations After taking your managerial economics class, you realize that you can probably raise your profits by price discriminating by charging different prices in the two locations. You then breakdown sales across the two locations. In Laredo: You sold 960 burger meals per week at $10 and 600 meals at $13. In San Antonio: You sold 1440 meals per week at $10 and 1200 meals at $13 A. Using the two prices above, estimate your demand function in Laredo. What would demand be at the optimal price from Q1 B. Using the two prices above, estimate your demand function in San Antonio. What would demand be at the optimal price from Q1?A company has 700 employees who work 140 hours a month each. Each worker earns $37 per hour. There is a profitable project the company would like to start, but it would require an additional 42,000 working hours within three months to be completed, and all the employees are fully loaded with other projects. The company does not want to hire new staff; they would like the project to be completed by the current workforce instead. Given that the wage elasticity of labor supply is 0.65, calculate the hourly wage the company should offer its employees to encourage them to work on the new project.A company has 350 employees who work 120 hours a month each. Each worker earns $21 per hour. There is a profitable project the company would like to start, but it would require an additional 21,000 working hours within three months to be completed, and all the employees are fully loaded with other projects. The company does not want to hire new staff; they would like the project to be completed by the current workforce instead.Given that the wage elasticity of labor supply is 0.8, calculate the hourly wage the company should offer its employees to encourage them to work on the new project. Use the midpoint method and round to two decimal places throughout your calculations.