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Given the on-going pandemic, the sale of Willis cleaning products jumped 15% to Rs. 425 million and increased income by 28%. Household sales surged 7% and profits rose 65% as both prices and demand increased and a germ-averse public stocked up. Assume yourself as an ambitious manager of Willis cleaning products, who wants to use these changes in the 4th quarter to calculate the own-price elasticity of demand. You have the data on changes in price and changes in quantity sold during the quarter.
Required: 1. What would be the main challenge they would face in calculating a reliable estimate of elasticity? 2. Suppose for the 3rd quarter this challenge did not exist, rather the challenge was one of data availability. All the manager knows, a few minutes before a quickly called meeting to discuss 3rd quarter results, is that the price of a pack of 35-count Clorox Wipes increased by 12% while revenue from those wipes increased by 5%. Calculate the own-price elasticity of demand for Clorox Wipes in this quarter.
Consider the following general demand and supply functions: ππ· = 1800 β 8π + 2π + 16ππ ππ = 50 + 12π β 20ππ΅ + 19πΉ where QD and QS are quantities demanded and supplied, respectively, P is price of the good, M is household income, PR is price of a demand-related good, PB is price of a supply-related good, and F is number of firms in the industry
Given the demand equation Q=250-50P . Determine the total revenue and marginal revenue functions. Does this situation occur in a perfectly competitive market? If yes why? If not why not?
37. In a perfectly competitive and constant-cost industry demand is given by Q = 2000 - 2P. The short total cost function at the scale of production that minimizes long-run costs for each identical firm is TC = 1000 + 100q + 10q2.
A. What will the long-run price be in this industry? How many firms will there be in long-run equilibrium?
B. What is the equation of the short-run supply curve if the industry is in long-run equilibrium?
C. Suppose that demand in this industry increases to: Q = 4000 - 2P. What will the new long run price be in this industry and how many firms will there be?
d. Describe how the industry will adjust to reach the new long-run equilibrium and illustrate your answer by drawing a graph of the firm and a graph of the industry.
Suppose cost of production of a firm is given by:
TC=128+50Q-16Q^2+2Q^3
What amount of the product should be produced to maximize profit of the firm if price per unit output is 74? Find the maximum profit or loss.
19. Suppose a given firm operating in a perfectly competitively market.
TFC = birr 600
TVC = birr 500 and TR = birr 700.
Should the firm stay in the business? What will be you answer if the TR changes to birr 450?
14. The total cost function of a firm is given by c = 100 + 40 q + 5q2.
A. Find Total fixed cost
B. Find the Marginal cost equation and the marginal cost of the 5th unit
C. Find Average variable cost equation and the AVC of the 4th unit
D. Find average fixed cost equation and the AVC of the 6th unit
E. Find average total cost equation and the ATC of the 3rd u
Β Illustrate the market for alcohol, labeling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output, and the efficient level of output.
Consider the market for fire extinguishers.
a. Why might fire extinguishers exhibit positive externalities?
b. Draw a graph of the market for fire extinguishers, labeling the demand curve, the social-value curve, the supply curve, and the social-cost curve.
c. Indicate the market equilibrium level of output and the efficient level of output. Give an intuitive explanation for why these quantities differ.
d. If the external benefit is $10 per extinguisher, describe a government policy that would yield the efficient outcome.
Consider the market for fire extinguishers.
a. Why might fire extinguishers exhibit positive externalities?
b. Draw a graph of the market for fire extinguishers, labeling the demand curve, the social-value curve, the supply curve, and the social-cost curve.
c. Indicate the market equilibrium level of output and the efficient level of output. Give an intuitive explanation for why these quantities differ.
d. If the external benefit is $10 per extinguisher, describe a government policy that would yield the efficient outcome.
