7 A firm believes the elasticity of demand for its product is -5 and it is producing a quantity where its marginal cost is $60 and its average cost is $40. If it is maximizing profits, then what price should it be charging for its product?

7 A firm believes the elasticity of demand for its product is -5 and it is producing a quantity where its marginal cost is $60 and its average cost is $40. If it is maximizing profits, then what price should it be charging for its product?

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

See similar textbooks

Related questions

Q: uppose that firm X increases the wages offered to its factors workers. Which of the following will…

A: Economic cost refers to the combination of losses of any products that have a value attached to them…

Q: Consider a market demand function P=100-0.01Q. There are only two firms in the market and each…

A: When there is no first-mover, both firms act as Cournot duopoly and when there is a first mover,…

Q: explain why there's a correlation between the global city and the poor

A: A global city refers to a city that has significant competitive advantages and functions as a hub…

Q: Referring to the table above, construct Jenni's labor demand schedule at each of the following daily…

A: The value of marginal product measures the revenue contributed by the last product or unit of a…

Q: John is planning to retire in 15 years. Money can be deposited at 8% compounded quarterly. What…

A: Given Semiannually Withdrawal = 25,940 Interest rate = 8% compound quarterly

Q: Required information A process for producing the mosquito repellant Deet has an initial investment…

A: Initial Investment = 200,000 Annual Cost = 43,000 Income = 90,000 per year

Q: Which of the following is NOT one of the four types of regulations demanded by industries? а.…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: 2. Suppose the total cost function of a firm that produces hotdogs is C = 150q- 4q+ 2q where q is…

A: Given that Total cost = 150q - 4q2 +2q3 MC = 150 - 8q + 6q2

Q: The situation in which policymakers have the incentive to announce one economic policy but then…

A: Policy makers use two approach to implement the policy. One is Rule based approach and nother is…

Q: [CLO-1] The options for investing money are represented as the following: 1. 5% APR compounded…

A: Effective annual rate = [1 + i/n]n - 1 Where i =Interest rate, n = Compounding periods.

Q: What can a multi-national enterprise do to minimize its exposure to political risks in its host…

A: A multinational enterprise (MNE) and at times likewise called multinational company (MNC), simply…

Q: John is planning to retire in 15 years. Money can be deposited at 8% compounded quarterly. What…

A: Semiannually Withdrawal = 25,940 Interest rate = 8% compound quarterly

Q: A company raises its cost per unit while also increasing its producer surplus per unit. Which of the…

A: A firm raises its cost per unit and also increases the producer surplus per unit. The consumer's…

Q: Google share price is $1759.73; Microsoft share price is $223.72; and Apple share price is 118.69.…

A: The P/E ratio is the price-to-earnings ratio. It is the ratio that denotes the amount of price to…

Q: Let the hourly production function for Fred's Fountains be the following: .251.5 The rental rate of…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: A monopolist earns $60 million annually and will maintain that level of profit indefinitely provided…

A: Answer; Monopolist earns annually =$60 million The opportunity cost of funds =10%=0.10 The…

Q: Explain the natural order hypothesis.

A: The natural order hypothesis proposes that infants learning their first language acquire grammatical…

Q: Why is it difficult for companies to be profitable under deflation? Explain by comparing the…

A: Inflation refers to the rate at which the average price level of all goods and service rises in the…

Q: figure shows a Country's Before and after trade equilibrium a) Under autarky, how many computer…

A: This figure shows a Country's Before and after trade equilibrium a) Under autarky, how many computer…

Q: Modified True or False: State whether each statement is true or false. If the statement is false,…

A: The equilibrium is established where the P=MC.

Q: The circular flow model explains how consumers and producers interact in an economy.

A: The two-sector circular flow model explains how the firms and the households interact with each…

Q: Question 2 Consider the AD-AS model discussed during the lectures. Assume that the aggregate demand…

A: (a) AD curve slopes negative as we can see from the function because of the wealth impact on the…

Q: F the market exchange rate of yen p Assessment paes If the market exchange rate of yen per dollar…

A: In the international market, exchange rate refers to the value of one currency in terms of another…

Q: Empirical Exercise 5.1 Suppose that the US inflation rate was at 7.6% in August 2018 and 8.1% in…

A: Answer - Philips Curve:- Philips curve is a curve which help establish relationship between…

Q: Economy: you should provide an account of your short-term and long-term economic modes of…

A: In financial matters, fathom the capability between the short run and the slong run. Coincidentally,…

Q: iv) Natural disasters increase the post-disaster Gross Domestic Product (GDP) but are bad to long…

A: GDP refers to the final value of goods and services that produced in a nation in a particular period…

Q: Required information A process for producing the mosquito repellant Deet has an initial investment…

A: The term "payback period" refers to the time it takes to return the cost of an investment. Simply…

Q: What are standard deductions?

A: There exists a difference between taxable income and the total amount of income earned by the…

Q: How did the U.S. emerge from World War Il as a superpower? O. Although the U.S. entered World War II…

A: With a global network of alliances and military bases, the United States is by far the most powerful…

Q: a firm earns $375 billion in profits for the year and they retain $218 billion, what is the percent…

A: As given Profit = $375 billion Retain = $218 billion Dividend payout ratio = Dividendsincome…

Q: Suppose that every consumer is on his/her budget constraint where MRS = 0.1, the price of good X is…

A: The marginal rate of substitution (MRS) is the quantity of one product that a customer will consume…

Q: A monopolistically competitive firm maximize profit where

A: Monopolistically competitive:- Monopolistic competition describes an economy where several…

Q: What value of F3 would be equivalent to the payments shown in the cash flow diagram below the…

A: Cash flow is the movement of money in and out of a company. Cash received signifies inflows, and…

Q: he marginal product of the 14 th worker is 8 and the firm sells its output for $4 per unit. If labor…

A: MP of 14th worker = 8 Output sell = $4 per output

Q: Your father invested a lump sum 24 years ago at 5.75 percent interest compounded monthly. Today, he…

A: Today's value of the investment = $105,099.24 Rate of interest =5.75 compounded monthly. We have to…

Q: Which of the following would cause the Fed to raise interest rates even though the rate of inflation…

A: Answer: Potential GDP: Potential GDP refers to the full employment level of GDP. If the actual GDP…

Q: 9-15. A small high-speed commercial centrifuge has the following net cash flows and abandonment…

A: Given:- Rate of return=10% Current market value=$7,500 To determine:- Optimal time to abandon=?…

Q: why is optimal employment important in the production function

A: The production function depicts the technical association between the quantities of output (Q) that…

Q: W7 Q5 A paper published in the Harvard Business Review points out a new way to calculate economic…

A: Given; Number of employees= 10000 Cost of capital= 4% Revenue= $660000 Personnel cost= $410000 Other…

Q: A negative cash balance requires an increase in payments and decrease in cash receipts. True or…

A: In economics, cash refers to the most liquid form of money that can be used anywhere to make any…

Q: The Coronavirus, in March 2022, was the reason for a major shutdown of economic activity across the…

A: The economics as a study is based upon the basic idea of scarcity, where the resources which are…

Q: Quantity per peried) Quantity (per period) Pan PaneD Quantity (per peried) Quantly (per perin…

A: When there is change in other factors and price remains constant, then the supply curve or demand…

Q: Price What is the difference between the industry demand curve for a typical good and the demand…

Q: cannot figure out how to start this problem for my behavioral economics course. I would appreciate…

A: Given:

Q: William's Department Store is trying to determine whether there is a difference in mobile…

A: The provided output is:

Q: The average car depreciates in value about 15% per year. Suppose you buy a silver Cherolet Cruze LTZ…

A: Given, The car value depreciates about 15% per year The depreciation rate(r) is 15% = 0.15 Now the…

Q: differences between the mainstream/New Keynesian and the Post-Keynesian theory of medium run…

A: New Keynesian Theory According to the New Keynesian Theory, prices and wages are closely related and…

Q: Capital investment Annual 0&M costs Electricity sales Decommissioning 50MW onshore €65M €40k per 2MW…

A: Given information Capital investment=65M for 50MW Annual expenditure=1M Annual revenue=8.2M Salvage…

Q: (a) State on thing that would cause market supply to increase (cause the supply curve to shift to…

A: Answer to the question is as follows:

Q: has justified the move on the grounds that the economy continues to be

A: The central bank of the nation controls the inflation and monetary policy by using policies such as…

Question

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?
1 Consider a firm that estimates that its price elasticity of demand equals -1.5. Price equals $36 and the marginal cost of production equals $12. Is this firm maximizing profit? Explain. If not, should the firm increase or decrease its price?
7. The Sylvan Corporation has estimated the price elasticity of demand for synthetic wood sorrel to be -0.25.a. If the price of Sylvan wood sorrel increases by 10%, what will happen to the quantity demanded of wood hewers?
2. The monthly market demand curve for calculators among engineering students is given by P = 100 – Q. where P is the price per calculator in dollars and Q is the number of calculators purchased per month. If the price is USD$ 30, how much revenue will calculator makers get each month? Find the price elasticity of demand for calculators at this point. What should calculator makers do to increase revenue?
7.you are the manager of a feed store in Millican and the supply cost of Purina cattle mineral is increasing. a. You must fill in the following table and answer the following questions. The elasticity of demand is -1.50 (hint: use this to calculate the quantity demanded when the sales price changes B.
23. The smaller the coefficient of price elasticity of demand for a product, the: A. smaller the resulting price change for an increase in supply. B. more rapid the rate at which the marginal utility of that product diminishes. C. less competitive will be the industry supplying that product. D. smaller the resulting quantity change for a decrease in supply.
Snooki, a new marketing intern, was a little scatterbrained during the first meeting with her manager, when she made four statements about pricing. Which one of her four statements about pricing was correct? a. A product with an elastic demand is likely to face little competition. b. An EDLP retailer offers many price promotions. c. A product with an elasticity of demand of -0.7 will enjoy increases in revenue when prices are cut. d. Cost-plus pricing is not the perfect pricing strategy because the pricing method ignores customers’ willingness to pay and competitors’ pricing strategy.
4. As a producer, how would you use the information about elasticity to maximize your revenue?Explain.
If there are 10 bakeries in a small city, why might the elasticity of demand for the products any one of them supplies be high? Why might this small city not be a good location for you to open a new bakery?
1. The sylvan corporation has estimated the pice elasticity of demand for synthetic wood sorrel to be -0.25. a. If the price of sylvan's wood sorrel increases by 10% what will happen to the quantity demanded of wood hewers. b. What will happen to sylvan revenue as a result of price increase?
Good or Service Price Elasticity Income Elasticity Beef -0.5 0.51 Long Distance Telephone -0.32 1.2 Cigarettes All smokers -0.7 0.9 Ages 15-18 -1.4 1.5 What will happen to sales for long-distance telephone if its price increases by 5% and income increases by 8%? Select one: a. Sales will decrease by 5%. b. Sales will increase by 5%. c. Sales will decrease by 8%. d. Sales will increase by 8%.
Figure 5-6 13 10 D 6 4 3 Supply 100 200 325 400 450 500 Refer to Figure 5-6. Using the midpoint method, what is the price elasticity of supply between points A and B? 0.1 0.43 2.33 1.0