Essay 4 - 20 pointsYou are the only pharmacist in a small town; the next closest drugstore is 50 miles away. The populationin your town consists of young farmers and older retired families. You have noticed that the young farmersare less sensitive to price changes than the retired population. Specifically, you have found that theworking population has an own price elasticity of demand of -2 and the retired farmers have an own priceelasticity of -4. How can you use this information to your advantage? Essay 3 - 20 pointsAs the manager of a local hotel chain, you have hired an econometrician to estimate the demand for oneof your hotels (H). The estimation has resulted in the following demand function: QH- 2.25PSE + 0.8POH + 0.01M, where PH is the price of a room at your hotel, Pc is the price of concerts inyour area, Pse is the price of sporting events in your area, PoH is the average room price at other hotels inyour area, and M is the average income in the United States. What would be the impact on your firm of:a. A $500 increase in income?b. A $10 reduction in the price charged by other hotels?c. A $7 increase in the price of tickets to local sporting events?d. A $5 increase in the price of concert tickets, accompanied by an $8 increase in income?2,000 – PH- 1.5Pc%3D-

*Answer: The pharmacist is the only pharmacist in the small town, so, he can act as a monopolist…

SE your area, PSe is the price of sporting events in your area, PoH is the your area, and M is the average income in the United States. What a. A $500 increase in income? b. A $10 reduction in the price charged by other hotels? c. A $7 increase in the price of tickets to local sporting events? d. A $5 increase in the price of concert tickets, accompanied by an

SE your area, PSe is the price of sporting events in your area, PoH is the your area, and M is the average income in the United States. What a. A $500 increase in income? b. A $10 reduction in the price charged by other hotels? c. A $7 increase in the price of tickets to local sporting events? d. A $5 increase in the price of concert tickets, accompanied by an

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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