Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are:QNY= 60 – 0.25PNYQLA= 100 – 0.5PLAwhere Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given byC = 1000 + 40Qwhere Q = QNY + QLA:a. What are the profit-maximizing prices and quantities for the New York and Los Angeles markets? (round all answers to two decimal places)In New York, the equilibrium quantity issubscribers at an equilibrium price of $.While in Los Angeles, the equilibrium quantity is subscribers at an equilibrium price of $.

profit maximization is the short run or long run process by which a firm may determine the price,…

ar's satellite company broadcasts IV to subscribers in LOS Angeles and New York. The demand functions for each of these two groups are: QNY = 60 - 0.25PNY QLA = 100 – 0.5PLA here Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C = 1000 + 40Q where Q = QNY + QLA: . What are the profit-maximizing prices and quantities for the New York and Los Angeles markets? (round all answers to two decimal places) In New York, the equilibrium quantity is subscribers at an equilibrium price of $ While in Los Angeles, the equilibrium quantity is subscribers at an equilibrium price of $

ar's satellite company broadcasts IV to subscribers in LOS Angeles and New York. The demand functions for each of these two groups are: QNY = 60 - 0.25PNY QLA = 100 – 0.5PLA here Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C = 1000 + 40Q where Q = QNY + QLA: . What are the profit-maximizing prices and quantities for the New York and Los Angeles markets? (round all answers to two decimal places) In New York, the equilibrium quantity is subscribers at an equilibrium price of $ While in Los Angeles, the equilibrium quantity is subscribers at an equilibrium price of $

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 5E

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Question 1 Sal's Streaming Company streams TV shows to subscribers in the US and Canada. Demand is Qus 50 (1/3)Pus - QCA 80 (2/3)P CA = - where Q's are in thousands of subscriptions per year and P's are the subscription prices per year. The cost of providing Q units of service is given by TC = 1000 + 30Q, where Q = Qus+ QCA (a) What are the profit-maximizing prices and quantities for the US and Canadian markets? (b) As a consequence of a new VPN service that Facebook has developed, subscribers in Canada are now able to get the US streams and vice versa, so Sal can charge only a single price. What is the profit-maximizing single price that he should charge? (c) In which situation is Sal better off? In terms of consumers' surplus which situation do people in Canada prefer and which do people in the US prefer? Why?
Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are QNY =40-0.2PNY QLA=80-0.5PLA where Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C = 1000 + 60Q where Q Suppose Sal can charge only a single price. QNY + QLA %3D What price should he charge, and what quantities will he sell in New York? A. $115.71, 18 В. $130, 14 C. $110, 25 D. $115.71, 22
What is the in-state and the out of state elasticity? Give your answer to two decimals.
Estimates of the marginal cost of Daraprim are $100 for a 100-pill bottle. If Turing Pharmaceuticals charged $75,000 per bottle, what is the elasticity of demand that Turing believed it faced?
2. The Ice Cream Lovers Society decided to open up an ice cream stand during the summermonths. They calculated that it would cost them $0.80 to make a scoop of ice cream and$350 a month to operate the stand. They hired a research team who determined that theprice-demand function given in dollars isp x x ( ) = −8 0.02wherexis the number ofscoops sold.a. Find the revenue functionR x( )b. Find the value ofxthat produces the maximum revenue algebraically.c. Find the maximum revenue algebraically.d. Find the price per scoop of ice cream that produces the maximum revenuealgebraically.e. Find the cost functionC x( )that describes the monthly costs of operating the icecream stand.f. Find the break-even points to the nearest scoop algebraically usingR x( )andC x( ) .g. Find the profit functionP x( ).
Vik and Fleet produce trainers in the sports-shoe market. For one of their main products they have the following demand curves: Vik PV =175 - 1:2Qv, Fleet Pf = 125 - 0:8Qf where P is in Rs. and Q is in pairs per week. The firms are currently selling 80 and 75 pairs of their products per week respectively. a. What are the current price elasticities for the products? b. Assume that Vik reduces its price and increases its sales to 90 pairs and that this also causes a fall in Fleet’s sales to 70 pairs per week. b. What is the cross-elasticity between the two products? Demand theory 119 c. Is the above price reduction by Vik to be recommended? Explain your answer
Vik and Fleet produce trainers in the sports-shoe market. For one of their main products they have the following demand curves: Vik PV =175 - 1:2Qv, Fleet Pf = 125 - 0:8Qf where P is in Rs. and Q is in pairs per week. The firms are currently selling 80 and 75 pairs of their products per week respectively. a. What are the current price elasticities for the products? b. Assume that Vik reduces its price and increases its sales to 90 pairs and that this also causes a fall in Fleet’s sales to 70 pairs per week.b. What is the cross-elasticity between the two products? c. Is the above price reduction by Vik to be recommended? Explain your answer
George has been selling 5,000 T-shirts per month for $8.50. When he increased the price to $9.50, he sold only 4,000 T-shirts. What is the demand elasticity? If his marginal cost is $4 per shirt, what is his desired markup and what is his initial actual markup? Was raising the price profitable?
What can be said about the price elasticity of demand in each of the following statements? “The Tikka delivery business in this town is very competitive. I’d lose half my customers if I raised the price by as little as 10%.” “My economics professor has chosen to use the Mankiw textbook for this class. I have no choice but to buy this book.” “I always spend a total of exactly Rs.1000 per week on coffee.” A news website reported (Feb. 17, 2020) that ridership of Karachi Metro Bus declined after a fare increase: “There were nearly four million fewer riders in December 2019, the first full month after the price of a token increased Rs. 25 to Rs.150, than in the previous December, a 4.3 percent decline.” Use these data to estimate the price elasticity of demand for Karachi Metro Bus. According to your estimate, what happens to the Karachi Metro Bus’s revenue when the fare rises? Why might your estimate of the elasticity be unreliable?
Sal’s Streaming Company streams TV shows to subscribers in the US and Canada. Demand is??? = 50 − (1⁄3)??? and ??? = 80 − (2/3)???where ?’s are in thousands of subscriptions per year and ?’s are the subscription prices per year.The cost of providing ? units of service is given by ?? = 1000 + 30?, where ? = ??? + ???.(a) What are the profit-maximizing prices and quantities for the US and Canadian markets?(b) As a consequence of a new VPN service that Facebook has developed, subscribers in Canadaare now able to get the US streams and vice versa, so Sal can charge only a single price. Whatis the profit-maximizing single price that he should charge?(c) In which situation is Sal better off? In terms of consumers’ surplus which situation do peoplein Canada prefer and which do people in the US prefer? Why?
Viking Publishing House observed that in the recent years books on nature conservation and climate change have been very popular. As a matter of fact, Jane Goodall's latest book, "The Book of Hope: A Survival Guide for an Endangered Planet" has been a best-seller and Viking estimates the following demand curve for the book: P = 150 - Q In this equation, P is the price of the book and Q denotes yearly sales in thousands 20,000 books would be expressed as Q = 20 books. In other words, Viking estimates that it incurs a cost of $40 for printing and shipping of each book and pays a $10 royalty to Jane Goodall for each book sold. a. Calculate the profit maximizing OUTPUT and PRICE for this book. Also, calculate the TOTAL PROFITS.
The manager of the Sell-Rite drug store accidentally mismarked a shipment of 20- pound bags of charcoal at $3.15 instead of the regular price of $4.25. In a week, a total of 180 bags of charcoal was sold. The store normally sells an average of 120 bags per week. What is the store’s arc elasticity of demand for charcoal? Also make an economic interpretation of the elasticity figure.