Question 1 4 out of 4 points A firm selling in two markets is practicing price discrimination Selected Answer: b. when it is charging different consumers different prices and the price difference is not based upon cost differences. Question 2 4 out of 4 points To maximize profit a price discriminating firm should Selected Answer: d. both a and c Question 3 0 out of 4 points If a firm is selling a product in two markets‚ A and
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MBA Managerial Economics Review Questions for the Final Exam (Illustrative Answers) PRICE IS LOWER IN A MORE ELASCTIC MARKET!!!!!!!!!! 0.1-1 Introduction:Managerial Decision-Making and Market Processes (a) How does operational effectiveness differ from organizational strategy? Operational effectiveness is achieving excellence in individual activities while organizational strategy is about combining these activities to fit and reinforce one another and create competitive advantage and
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profit margin or maintaining the U.S. dollar price? To answer this question‚ the price elasticity of demand must be known for the Porsche Carrera. If the car is relatively inelastic‚ the company can count on high exchange rate pass-through. Meaning‚ that the Porsche may keep the profit margin by increasing the price of the car as the U.S. dollar weakens in relationship to the Euro. If the car has elastic demand‚ meaning that price elasticity is less than 1‚ the car maker will have
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service and due to unforeseen circumstances the demand increases? What happens if the price increases? How does this change affect your goods and or services? The Price of Elasticity of Demand can help determine each of these situations and calculate whether the price should be raised or dropped due to cost and demand of a product. Explanation is key; we will use these examples and explain how Price of Elasticity of Demand is used: If the demand for corn increases due to its use as an alternative
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of the model. According to this theory‚ modern firms are managed by both the manager and the shareholders. A manager aims to maximize the rate of growth of the firm and the shareholders will try to maximize the dividend and the increase the share price. Sales Maximization Model: This is alternative model for profit maximization model. The model has been propounded by W.J. Baumol who was an
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marketing strategy for the first half of 2012 for The McKenzie Hotel Group’s newest hotel‚ a luxury 5 Star property on the Palm Jumeirah in Dubai. The input provided has considered the service on offer‚ cost scenarios‚ target markets‚ supply and demand effects‚ market structure‚ pricing strategies and the impact of recession and currency effects. The service to be marketed is a 5 Star hotel with 380 luxury rooms supported by a range of food and beverage outlets. Located in Dubai‚ the domestic market
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MR c) What is cross-price elasticity? (2 marks) d) For each of the following pairs of goods state whether the cross-price elasticity is likely to be greater‚ smaller or equal to zero. (8 marks) i) Petrol‚ car ii) Tea‚ coffee iii) Nike trainers‚ generic brand trainers. tie‚ business suit. iv) e) In the discussion of elasticity and raising and lowering prices‚ economists suggest that if you have an elastic demand you should hesitate to raise your price‚ and that lowering price can possibly increase
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decrease in the cost of labor for producing bicycles. (4 pts.) What happens to bicycle supply? (6 pts.) What happens to bicycle demand? Student Answer: When there is an increase in the price of labor for making bicycles the supply would decrease because it would cost more to make the bikes and the supply curve would shift to the left. There would be no change in the demand for the bicycles. Instructor Explanation: Since a change in costs to produce the product is a supply factor‚ a decrease
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burden (incidence) of an indirect tax on the producers & on the consumer varies depending on the price elasticity of demand for the good/product. Indirect Tax is a tax placed upon the selling price of a product‚ so it raises the firm’s cost and shifts the supply curve left or vertically upwards depending on the amount of tax. Because of this shift‚ less products will be supplied at every price. The diagram below shows the effect of imposing a tax and how the tax is being paid. There’re two
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we can drew‚ as the prices of the batteries fall down ‚ the volume or the demand for them will go up and the way around. The competitors selling batteries are too many‚ that makes the price of them goes down as the demand is too high and consumers have got big selection. We consider that as price elasticity of demand‚ where the elasticity measures the extent to which demand will change. Where we have % change in demand greater than % change in price‚ we have elastic demand same as in this case
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