Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Macroeconomics Expert

1. The demand for good X is estimated to be:
                     1000Qx – 40Px 50Py 2M 10Ax
where

Px = price of X in dollars

M= personal disposable income in trillions of dollars per year

Py =price of a competitive in dollars

Ax = advertising expenditures in dollars $ per year

Qx = sales per year in the U.S.
Suppose PX = $5, PY = $10, M = $2500, and AX = $100.

a. What is the demand curve and quantity demanded for good X?

b. At the present price, would total revenue rise or fall if the price of the good is lowered? Why?

c. From the conditions in part a, what is the point income elasticity of demand?

d. What is the cross-price elasticity between goods X and Y? Are goods X and Y substitutes or complements? Why? Will the cross-price elasticity between Y and X be the same?

e. From the conditions in part a, what is the point advertising elasticity of demand?

f. Is the demand facing this company more sensitive to a one percent increase in income or a one percent increase in advertising expenditures?

g. Find the algebraic expressions for the company’s total and marginal revenue functions. (Remember, TR = f(Q) and MR = f(Q).)

h. Produce a graph of total revenue and marginal revenue. Graph total revenue for quantities up to 7,500 and put the marginal revenue graph on separate axes, and graph marginal revenue for quantities up to 7,500 also.

i. What level of sales would maximize the company’s total revenues? What price does the company have to charge for X for that level of sales result?

2. Joe is evaluating the marketing strategy at his restaurant and inn. Assume that in response to a $2.00 off sales promotion for spaghetti dinners, Joe finds that nightly dinner sales increase from 20 per night to 40. Usually the dinners sell for $6.00.

a. What is the arc price elasticity of demand for Joe’s spaghetti dinners?

b. Will Joe increase revenues by further reducing the price? What about profits? Describe.

3. For some time, two firms have charged $0.90 per standard unit of crating materials for shipping a particular type of machine tool and each has been selling about 20,000 units per month. Last month, U-Pak-It reduced its price to $0.80 per unit and its volume increased to 25,000 units. At that month, Boxit (the other company) maintained its price at $0.90 but saw its volume decline to 17,000 units.

a. What is the price elasticity of demand facing U-Pak-It?

b. What is Boxit’s cross-price elasticity of demand for U-Pak-It price changes?

c. If the price elasticity of demand for Boxit is the similar as that for U-Pak-It, what price reduction for Boxit will be needed to increase its monthly volume back to 20,000 units per month?

4. Assume that the price elasticity of demand for cereal is −0.75 and the cross-price elasticity of demand between cereal and the price of milk is −0.9. If the price of milk rises by 10%, what would have to happen to the price of cereal to exactly offset the rise in the price of milk so as to leave the quantity of cereal demanded unchanged?

5. Assume you have find outd the following demand function for the product you sell:
   Q = 5-0.2P
At what price will the demand for your product be unitary elastic? (Hint: Begin by recalling the relationship between MR and elasticity.)

6. Using the macro model:

a. Show what would happen to national income (GDP) if the administration implements another $100 (billion) stimulus spending package.

b. Show what will happen if instead of a government spending package, the administration implemented a $100 tax cut.

c. From your results, find outs the numerical values of the derivatives dY/dG and dY/dT. (Hint: Numerically, dY is just the new value of Y less the old value and dG is the new value of government spending less the old one. Find the ratios of those numbers and you have found the value of the derivative.) Which policy has the largest effect and why?

7. You’re standing at three light switches at the bottom of stairs to the attic. Each one corresponds to one of three lights in the attic, but you can’t see the lights from where you stand. You could turn the switches on and off and leave them in any position. How can you recognize which switch corresponds to which light bulb if you are only allowed one trip upstairs?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M91074

Have any Question? 


Related Questions in Macroeconomics

The government uses policies like student loans and free

The government uses policies like student loans and free trade to influence the economy's growth rate. Write a thoughtful and articulate paper that includes the following: Identify at least four policies from the textboo ...

If consumption is given by c 200 075y - t and investment

If consumption is given by C = 200 + 0.75(Y - T) and investment is given by I = 200 - 25r, then the formula for the IS curve is: Y= 1,600 - 3T- 100r +4G Can you please explain this answer in steps as well. It was an old ...

Choose one of the following two questions to discuss if

Choose one of the following two questions to discuss. If there are two original posts related to one question, then you have to choose the other question for your original post. 1. The world's Least Developed Country can ...

How would a keynesian economist use fiscal policy to fix a

How would a Keynesian economist use fiscal policy to fix a recession? How would a Keynesian economist use fiscal policy to fix an inflation?

Intermediate macroeconomics assignment1 consider the

Intermediate Macroeconomics Assignment 1. Consider the Keynesian Cross model, where consumption C = 100 + 0.75(Y - T), investment I = 175, and government expenditure G = 100 and taxes T = 100. (a) Compute the equilibrium ...

Purposethe purpose of the term paper is to give you an

Purpose The purpose of the term paper is to give you an opportunity to apply the economic concepts, principles, tools, and models that we have and will examine in this course to interpret current macroeconomic events. Yo ...

Let the exchange rate be defined as the number of dollars

Let the exchange rate be defined as the number of dollars per Japanese yen. Assume there is an increase in U.S. interest rates relative to that of Japan. (Part A) Would this event cause the demand for the dollar to incre ...

The stock market is like a casino and buying stock is just

The stock market is like a casino and buying stock is just like placing a bet. Stocks are risky but with good research and prudent planning one can earn significant returns. Pick a statement and defend it.

A assume a country is in a fixed exchange rate regime such

a. Assume a country is in a fixed exchange rate regime such as China. Explain what factors might cause individuals to expect that a country will revalue its currency. Explain the various actions that policy makers can ch ...

Milestone three feeding americabecause the moneyneeded to

MILESTONE THREE Feeding America Because the moneyneeded to operate a not-for-profitorganizationcomeslargely fromprivate donations and public grants, spending the money wisely is a top priority. In addition, where there i ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen