Economics Answers

The Creative Publishing Company (CPC) is a coupon book publisher with markets in several
southeastern states. CPC coupon books are either sold directly to the public, sold through
religious and other charitable organizations, or given away as promotional items. Operating
experience during the past year suggests the following demand function for CPC’s coupon
books:
Q = 5,000 – 4,000P + 0.02Pop + 0.5I + 1.5A
Where: Q is quantity, P is price ($), Pop is population, I is disposable income per household ($),
and A is advertising expenditures ($).
A. Determine the demand faced by CPC in a typical market in which P = $10, Pop = 1,000,000
persons, I = $30,000, and A = $10,000.
B. Calculate the level of demand if CPC increases annual advertising expenditures from
$10,000 to $15,000.
C. Calculate the demand curves faced by CPC in parts A and B.

The Eastern Shuttle, Inc., is a regional airline providing shuttle service between New York and
Washington, DC. An analysis of the monthly demand for service has revealed the following
demand relation:
Q = 26,000 – 500P – 250POG + 200IB – 5,000S
Where: Q is quantity measured by the number of passengers per month, P is price ($), POG is
a regional price index for other consumer goods (1967 = 1.00), IB is an index of business activity,
and S, a binary or dummy variable, equals 1 in summer months and 0 otherwise.
A. Determine the demand curve facing the airline during the winter month of January if POG
= 4 and IB = 250.
B. Determine the demand curve facing the airline, quantity demanded, and total revenues
during the summer month of July if P = $100 and all other price-related and business
activity variables are as specified previously.

Kitty Russell’s Longbranch Cafe in Sausalito recently reduced Nachos Supreme appetizer prices
from $5 to $3 for afternoon “early bird” customers and enjoyed a resulting increase in sales
from 60 to 180 orders per day. Beverage sales also increased from 30 to 150 units per day.
A. Calculate the arc price elasticity of demand for Nachos Supreme appetizers.
B. Calculate the arc cross-price elasticity of demand between beverage sales and appetizer
prices.
C. Holding all else equal, would you expect an additional appetizer price decrease to $2.50
to cause both appetizer and beverage revenues to rise? Explain
Hint: For Arc use average price (P1+ P2/2) and quantity as average quantity (Q1+Q2/2).

NEXT is contemplating a T-shirt advertising promotion. Monthly sales data from T-shirt shops
marketing the “Eye Watch NEXT” design indicate that
Q = 1,500 – 200P
Where: Q is T-shirt sales and P is price.
A. How many T-shirts could NEXT sell at $4.50 each?
B. What price would NEXT have to charge to sell 900 T-shirts?
C. At what price would T-shirt sales equal zero?
D. Calculate the point price elasticity of demand at a price of $5?

hi! just want to ask why in a perfect competitive labour market, the supply curve of labour to a firm is perfectly elastic? i believe this is similar to the demand curve of a firm in a perfectly competitive market, but if it this is true then shouldn't the demand curve for labour be perfectly elastic not the supply curve? However, I know the whole MPR and diminishing returns things that make the demand curve for labour downward sloping. So, this is contradicting!
Also, why is the supply curve for labour in a monopoly upward sloping? If there is only ONE buyer in the labour market, shouldn't the workers be satisfied with lower wages as there is only one employer? if that employer don't employ them, then they will have no job!

The marriage between economics and mathematics has been dismal to say the least according to some proponents but yet other proponents applaud this marriage as the marriage of the century. Propose your stand point to this divide.

A local pizzeria sells 500 large pepperoni pizzas per week at a price of $20 each. Suppose the owner of the pizzeria tells you that the price elasticity of demand for his pizza is -2, and he asks you for advice. He wants to know two things. First, how many pizzas will he sell if he cuts his price by 10%? Second, how will his revenue be affected?

explain a drought around the world raises the total revenue that farmers receives from the sale of grains but a drought only in punjab reduces the total revenue that farmers in punjab receive ?

if we observed that more ice-cream is purchase this year than last year. we may conclude that demand has increased and therefore the the prices must have increased?explain

Today is his 24th birthday. He plans to retire at 65 years old and he expects to live for another 20 years afterwards. He wants an income of $30,000 per year during his retirement years, to be paid annually on his birthday (starting from his 65th birthday). He plans to save some amount at each birthday from the age 25 to 64. He thinks about saving a constant amount for the first 10 years and then increases his saving at 3% each year until the last one before his retirement. The bank provides two types of accounts. One account pays 6.9%/year compounded quarterly. The other account pays 7%/year compounded annually?
(a) Which account would you recommend? Why?
(b) After choosing the proper account, how much should your brother save each year
for the first 10 years?
(c) What is the balance of your brother’s account right after he makes his deposit in
his saving account on his 50th birthday?