Assignment 3 LONG TERM INVESTMENT DECISION The grocery food market is filled with various options for microwavable food depending on the preferences of the consumers. Instead of the traditional use of the oven many families now use the microwave because of their busy lifestyles. The variety of healthy low calorie -microwave food has made shopping much easier for today’s busy consumer. Low calorie labels are regulated by the Food and Drug Administration (FDA) and require food “labels claiming low-calories
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ECON 600 Lecture 3: Profit Maximization I. The Concept of Profit Maximization Profit is defined as total revenue minus total cost. Π = TR – TC (We use Π to stand for profit because we use P for something else: price.) Total revenue simply means the total amount of money that the firm receives from sales of its product or other sources. Total cost means the cost of all factors of production. But – and this is crucial – we have to think in terms of opportunity cost, not just explicit monetary
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gaining customers/having fair price and funds to start the businesses Numbers of organizations Many (3,000 paper mills in the US) One/ Two for a few more months. As of October 7, 2010 there were 160.000 fast food restaurants in the United States. According to the U.S. Census Bureau, as of 2002, there were 117,100 gas service stations in the U.S Price elasticity of demand Price inelastic because no parameters can affect the ebb and flow of business. Price of paper products are relatively
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St indicates total supply of the commodity in country A (Sa Sbt Sct). Price P1 is established. Country A produces Qa domestically and imports Qb and Qc from countries B and C, respectively. When countries A and B form a customs union to the exclusion of C, the relevant supply curve in country B becomes Sb, while Sct remains in effect in country C.2 Total supply in country A’s market becomes Scu, consisting of Sa Sb Sct. The price in country A drops to P2; domestic supply declines to Qa1; imports from
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Chp 5-6 1. A. Ed= 2.5 - Elastic Demand- a price increase would reduce total revenue resulting in an increase in total revenue B. Ed= 0.8 – Inelastic demand – a price increase would increase total revenue and reduce total revenue. 2. A. 400-600/600=-.33%/-.2222= -1.5 B. 500-600/600= -.75/-.2222= -.75 (both inelastic because they are less than 1) 3. A. Diamonds B. Nasal decongestant spray C. Breakfast cereal (These all have a greater availability of substitutions-more elastic) D. Gasoline
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Chapter 3 Demand Analysis Solutions to Exercises 1. With more rural households, Canadian demand for gasoline maybe less price sensitive than U.S. demand where urbanities are offered more mass transit alternatives. 2. %ΔQ = −20 %ΔP = +5 %ΔY = −2 %ΔPgas = +20 a. %ΔQ = 1.5(−2%) = −3% b. %ΔQ = −0.3(20%) = −6% c. −20% = 1.5(−2%) + (−0.3)(20%) + (ED)(5%) ED = −2.2 EY = 1.5 EX = −0.3 3. a. ED = [(450 − 525)/(450+525)]/[(8000 − 7200)/(8000+7200)] ED = −1.46 b. EY = [(400 − 450)/(400+450)]/[(590 −610)/(590+610)]
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cigarettes, and cut the number of adults who smoke by about a third. In India, central-excise duty has increased 1606% on the shortest non-filter cigarettes available and 198% on the shortest filter cigarettes since 1996. Taxes constitute about 60% of the price of a best-selling pack of 20 cigarettes, against about 43% in the US. But India was not able to reduce its capita annual consumption of cigarettes in the same proportion. Cigarette smokers in India increased from 25 million to 46.4 million over 14
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developed through years of experience in the market. It is impossible to imitate such an effective distribution system by the new entrants. Question 2 Elasticity of Demand There are four general determinants of elasticity of demand. Only three are relevant; the fourth is time. This means that the longer the time period the higher the elasticity
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to Liliha Bakery's homepage website will include an online ordering service along with a loyalty rewards program. This service is common in many food chain industries. The business proposal will provide a new service, the market structure, price elasticity, possible non-pricing strategies to increase barriers to entry, and determine how a mix of fixed and variable costs can change business operations. Liliha Bakery Liliha Bakery was a family owned business that opened in 1950 and later sold
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cyclical and/or seasonal. To determine if sales are cyclical, examine the pattern of company sales over the business cycle. To determine if sales are seasonal, plot quarterly sales data. 4. Recall that price elasticity is a function of (i) the number of available substitutes, (ii) the price level relative to customers’ budgets, (iii) and the durability of the product. Describe these factors for the firm’s primary product. Based on this analysis, does the firm face elastic or inelastic demand with
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