## davenport econ625 Problem Set 2

â¢ Question

1

2 out of 2 points

The

following situation will be used to answer questions 1 through 5. (Adapted from chapter 3 problem 4)

Monthly demand and supply for a computer support service

catering to small businesses can be represented by these equations:

Qd = 3000 – 10P

Qs = -1000 + 10 P

where Qd is the number of businesses demanding the services,

Qs is the number of businesses that suppliers are willing to service, and P is

the monthly fee, in dollars.

At what average monthly fee would demand equal zero?

â¢ Question

2

2 out of 2 points

Refer

to the situation in question 1.

At what average monthly fee would supply equal zero?

â¢ Question

3

2 out of 2 points

Refer

to the situation described in equation 1. What is the equilibrium price?

â¢ Question

4

2 out of 2 points

Refer

to the situation in question 1. What is the equilibrium output level?

â¢ Question

5

2 out of 2 points

Refer

to the situation in question 1.

Suppose demand increases and leads to a new demand curve:

Qd = 3500 – 10P

What will be the new equilibrium price and quantity?

.

â¢ Question

6

2 out of 2 points

The

following situation applies to questions 6 through 9. (Adapted from chapter 3

problem 6)

Joy’s Frozen Yogurt shops have enjoyed rapid growth in

northeastern states in recent years. From the analysis of Joy’s various

outlets, it was found that the demand curve follows this pattern:

Q = 200 – 300P + 120I + 65T – 250Ac + 400 Aj

where Q = number of cups served per week, P = average price

paid for each cup, I = per capita income in the given market (thousands), T =

average outdoor temperature, Ac = competition’s monthly advertising

expenditures (thousands) and Aj = Joy’s own monthly advertising expenditures

(thousands)

One of the outlets has the following conditions: P=1.50,

I=10, T=60, Ac=15, Aj=10.

Estimate the number of cups served per week by this outlet.

â¢ Question

7

0 out of 2 points

Refer

to the previous question. Which of the following represents the demand curve

for this market?

â¢ Question

8

2 out of 2 points

Refer

to question 6. What will be the effect of a $5 thousand increase in the

competitor’s advertising expenditure?

â¢ Question

9

2 out of 2 points

Refer

to question 6 and question 8. What would Joy’s expenditure need to be to

counteract the effect of the competitor’s increase in advertising that was

described in question 8?

â¢ Question

10

2 out of 2 points

The

Teenager Company makes and sells skateboards at an average price of $70 each.

During the past year, they sold 4,000 of these skateboards. The company

believes that the price elasticity for this product is about -2.5. Which of the

following would be the best option for the company? (Based on Chapter 4 question 6)

â¢ Question

11

2 out of 2 points

Refer

to the situation described in question 10. What was total revenue for the past

year, in dollars? (Enter as a whole number without the dollar sign.)

â¢ Question

12

0 out of 2 points

Refer

to the situation described in question 10. Given the price elasticity of -2.5,

and the proposed price of $63, what should be the quantity supplied? (Round to

the nearest whole number.)

â¢ Question

13

1 out of 2 points

Refer

to the situation described in question 10.

What would total annual revenue be at the proposed price of $63? (Enter

as a whole number without the dollar sign.)

â¢ Question

14

2 out of 2 points

If the

companyâs belief is correct, would total revenue increase, decrease, or remain

the same as a result of the price cut to $63?

â¢ Question

15

2 out of 2 points

Questions

15 through 17 refer to the following scenario. A local supermarket lowers the

price of its vanilla ice cream from $3.50 per half gallon to $3. Vanilla ice

cream unit sales increase by 20 percent. The store manager notices that the

unit sales of chocolate syrup increase by 10 percent.

What is the price elasticity of vanilla ice cream? Round to

the nearest tenth and drop the minus sign when submitting your answer.

â¢ Question

16

2 out of 2 points

How

would you measure the effect of the ice cream price on chocolate syrup sales?

â¢ Question

17

0 out of 2 points

Refer

to question 15. Overall, do you think that the new pricing policy was

beneficial for the supermarket?

â¢ Question

18

2 out of 2 points

Questions

18 through 21 refer to the following: The demand curve for a product is given

as Q = 2000 â 20P. How many units will be sold at $10?

â¢ Question

19

2 out of 2 points

At what

price would 1500 units be sold? (Enter as a whole number without the dollar

sign.)

â¢ Question

20

0 out of 2 points

What

will be the total revenue at a price of $70? (Enter as a whole number without

the dollar sign.)

**CLICK HERE TO ORDER A SIMILAR PAPER**

We pride ourselves in writing quality essaysCLICK HERE TO CONTACT US