- You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits....(Solved)
You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits. This firm is a monopolist which sells in two distinct markets, one of
which is completely sealed off from the other.
As part of the analysis, you establish that the total demand for the firm‟s output is given by the
following equation:
Q = 50 – 0.5P
and the demand for the firm‟s output in the two markets is given by the following equations:
Q1 = 32 – 0.4P1 and
Q2 = 18 – 0.1 P2
Where: Q = total output
P = Price
Q1 = Output sold in Market 1
Q2 = Output sold in Market 2
P1 = Price charged in Market 1
P2 = Price charged in Market 2
The cost of production is given by C = 50 + 40Q
Where C = total cost of producing bread.
What price must be charged in each market in order to maximize profits?
Date posted: February 7, 2019. Answers (1)
- You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits....(Solved)
You have been hired as a consultant by a firm producing bread to advise on a pricing strategy that would
enable the firm to maximize profits. This firm is a monopolist which sells in two distinct markets, one of
which is completely sealed off from the other.
As part of the analysis, you establish that the total demand for the firm‟s output is given by the
following equation:
Q = 50 – 0.5P
and the demand for the firm‟s output in the two markets is given by the following equations:
Q1 = 32 – 0.4P1 and
Q2 = 18 – 0.1 P2
Where: Q = total output
P = Price
Q1 = Output sold in Market 1
Q2 = Output sold in Market 2
P1 = Price charged in Market 1
P2 = Price charged in Market 2
The cost of production is given by C = 50 + 40Q
Where C = total cost of producing bread.
Determine the total output that the firm must produce in order to maximize profits.
Date posted: February 7, 2019. Answers (1)
- Given a hypothetical consumption function of the form:
C = a + bYd
Where Yd = Y – T
And Y = Income
...(Solved)
Given a hypothetical consumption function of the form:
C = a + bYd
Where Yd = Y – T
And Y = Income
T = Taxes and that:
Government spending and investment are exogenously determined at G and I respectively: Determine Government Spending
Multiplier.
Date posted: February 7, 2019. Answers (1)
- What is the relationship between the simple multiplier and marginal propensity to consume?(Solved)
What is the relationship between the simple multiplier and marginal propensity to consume?
Date posted: February 7, 2019. Answers (1)
- Based on the circular flow of income analysis, explain why marginal propensity to consumer
plus marginal propensity to save equals one.(Solved)
Based on the circular flow of income analysis, explain why marginal propensity to consumer
plus marginal propensity to save equals one.
Date posted: February 7, 2019. Answers (1)
- Explain how the concept of elasticity guides decisions in price discrimination by a monopolist(Solved)
Explain how the concept of elasticity guides decisions in price discrimination by a monopolist
Date posted: February 6, 2019. Answers (1)
- Explain how the concept of elasticity guides decisions in devaluation policy to encourage exports and discourage imports(Solved)
Explain how the concept of elasticity guides decisions in devaluation policy to encourage exports and discourage imports
Date posted: February 6, 2019. Answers (1)
- Explain how the concept of elasticity guides decisions in government?s tax policy on household consumption(Solved)
Explain how the concept of elasticity guides decisions in government‟s tax policy on household consumption
Date posted: February 6, 2019. Answers (1)
- The demand and supply schedules for carrots in a certain market are given below:
Determine the equilibrium quantity and price by graphical method(Solved)
The demand and supply schedules for carrots in a certain market are given below:
Determine the equilibrium quantity and price by graphical method
Date posted: February 6, 2019. Answers (1)
- In a certain economy the marginal propensity to save is 0.2 and the autonomous consumption equals
400. If the Government?s expenditures were to increase by 50%...(Solved)
In a certain economy the marginal propensity to save is 0.2 and the autonomous consumption equals
400. If the Government‟s expenditures were to increase by 50% what would be the resultant change in National income.
Date posted: February 6, 2019. Answers (1)
- In a certain economy the marginal propensity to save is 0.2 and the autonomous consumption equals
400. Formulate the consumption function.(Solved)
In a certain economy the marginal propensity to save is 0.2 and the autonomous consumption equals
400. Formulate the consumption function.
Date posted: February 6, 2019. Answers (1)
- In the context of international trade, explain the concept of comparative advantage with specialization(Solved)
In the context of international trade, explain the concept of comparative advantage with specialization
Date posted: February 6, 2019. Answers (1)
- What is meant by the term international trade?(Solved)
What is meant by the term international trade?
Date posted: February 6, 2019. Answers (1)
- Explain the economic effects of a high rate of inflation(Solved)
Explain the economic effects of a high rate of inflation
Date posted: February 6, 2019. Answers (1)
- What are the major causes of inflation?(Solved)
What are the major causes of inflation?
Date posted: February 6, 2019. Answers (1)
- Define inflation.(Solved)
Define inflation.
Date posted: February 6, 2019. Answers (1)
- Explain what fiscal policy entails.(Solved)
Explain what fiscal policy entails.
Date posted: February 6, 2019. Answers (1)
- To what extent can an economy be supported by deficit – financing?(Solved)
To what extent can an economy be supported by deficit – financing?
Date posted: February 6, 2019. Answers (1)
- Clearly explain the meaning of deficit financing of the national budget.(Solved)
Clearly explain the meaning of deficit financing of the national budget.
Date posted: February 6, 2019. Answers (1)
- Clearly explain the principle functions of taxation(Solved)
Clearly explain the principle functions of taxation
Date posted: February 6, 2019. Answers (1)