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When the first Pizza Hut opened its doors back in 1958, it offered consumers one style of pizza: its Original Thin Crust Pizza. Since its modest beginnings, Pizza Hut has established itself as the leader of the $25 billion pizza industry. Today, Pizza Hut offers five styles of pizza, including the Original Thin Crust Pizza, Pan Pizza, and its Hand-Tossed Style. Explain why Pizza Hut has expanded its offerings of pizza over the past five decades, and discuss the long-run profitability of such a strategy
d) The same deputy minister of finance indicated that based on their research, after a
while mobile money customers will return to their respective service:
“The research we did also told us that there will be about 24 per cent attrition rate in the three months to six months that we will introduce it. The same research told us what should be done to bring back these people after a while, and we have all these things in place” Suppose that the 3-6 months constitute short-run and any period after that constitutes long-run. Based on the minister’s statement, is the demand for mobile money services more or less elastic in the short-run compared to the long-run? Is this consistent with what we learned about elasticity in this class? Explain.
Problem three: E-levy and elasticity of demand for electronic transaction
services
Consider the following facts about mobile money transactions. Currently, MTN and
AirtelTigo charge 1% on mobile money transactions up to a total charge of GHS 10
per transaction while Vodafone charges 0%. The E-levy which is currently being
discussed is intending to impose an additional 1.5% charge on most electronic
transactions.
c) What does your answer in part (b) imply about the likely amount the government can
realize about the E-levy? (Hint: calculations are not needed here. Just explain whether
the government will raise a lot of revenue or not much revenue).
Problem three: E-levy and elasticity of demand for electronic transaction
services
Consider the following facts about mobile money transactions. Currently, MTN and
AirtelTigo charge 1% on mobile money transactions up to a total charge of GHS 10
per transaction while Vodafone charges 0%. The E-levy which is currently being
discussed is intending to impose an additional 1.5% charge on most electronic
transactions.
a) In ordinary language, explain what it means to say the demand for mobile money
transactions is price elastic.
b) A deputy minister of finance has suggested that the introduction of the E-levy will
reduce mobile money transactions by 24%.1 Based on this and information in the
preamble to this question, is the demand for mobile price elastic or price inelastic? Does
your answer depend on which mobile network one is using?
In order for price discrimination to work,three conditions must be fulfilled. Which of the following is not one of those conditions?
A. Consumers are illogical because they are buying more Starbucks beverages in 2019 despite the fact that Starbucks has raised prices 10 to 30 cents per drink.
11. Let's call the original demand curve (from Question 4) D1 and the new demand curve (from Questions 6-10) D2. Plot both of the demand curves on the graph above. Use the formulas for the two demand curves to compute the quantity demanded shown by each curve at a price of 34. 12. Demand Curve D1: Price: 34, Quantity: 13. Demand Curve D2: Price: 34, Quantity: 14. Describe what has happened to demand in this problem.
Draw the indifference curve for someone deciding how to allocate time between work and leisure. What will be the shape of labour supply curve?
Sketch the long run average cost curve from the short run AC curves. Why is it called the planning curve?Is the long run marginal cost curve an envelope curve. Explain?
1. Plot the following Price and Quantity combinations: (4, 8), (1, 2), (5, 10) 2. Is your graph more likely to be a demand curve or a supply curve? Why? 3. Using the equation of a line, and P for price and Q for quantity, what is the algebraic formula of this curve?
