Identification of the strategic issues and problems The first issue for the Springfield Nor’easters was being a new minor league baseball team in an already troubling market. A minor league ice hockey team named the Falcons had already announced that unless the team sold 300 plus season tickets‚ they would be leaving Springfield. Another important issue for the Nor’easters was Larry’s lack of sport industry experience and the length of time to develop a pricing strategy. Larry had 6 months to
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What is the break-even point in passengers and revenues per month? First we have to figure out the contribution Margin = Sales per fare – variable expense per unit: $160.00 - $70.00 = $90.00 (Contribution Margin. Break Even point in passengers= Fixed costs (divided) contribution Margin: $3‚150‚000 / $90 = 35‚000 passengers. Break-even point in revenues per month = Fare sales to breakeven (X) Sales per unit. 35‚000 x $160 = $5‚600‚000 • What is the break-even
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Springfield Express is a luxury passenger carrier in Texas. All seats are first class‚ and the following data are available: Number of seats per passenger train car 90 Average load factor (percentage of seats filled) 70% Average full passenger fare $160 |Average variable cost per passenger $70 |Fixed operating cost per month $3‚150‚000 1. What is the break-even point in passengers and revenues per month? Unit CM = $160 – $70= $90 a.) Unit of Sales = 3‚150‚000 / $90= 35‚000 passengers
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when the profit maximizing assumption is maintained‚ the notion of profits has been broadened to take into account uncertainty faced by the firm (in realizing profits) and the time value of money. In this more complete model‚ the goal of maximizing short-term profits is replaced by goal of maximizing long-term profits‚ the present value of expected profits‚ of the business firm. The expected profit in any one period can itself be considered as the difference between the total revenue and the total
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Chapter 7 The Production Process: The Behavior of Profit-Maximizing Firms Prepared by: Fernando & Yvonn Quijano © 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair CHAPTER 7: The Production Process: The Behavior of Profit-Maximizing Firms The Production Process: The Behavior of Profit-Maximizing Firms 7 Chapter Outline The Behavior of ProfitMaximizing Firms Profits and Economic Costs Short-Run versus Long-Run Decisions The Bases of Decisions:
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Quiz 10 A pure monopolist is selling 6 units at a price of $12. If the marginal revenue of the seventh unit is $5‚ then: [pic] |[pic] |firm’s demand curve is perfectly elastic. | |[pic] |price of the seventh unit is $10. | |[pic] |price of the seventh unit is greater than $12.
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Springfield Express is a luxury passenger carrier in Texas. All seats are first class‚ and the following data are available: Number of seats per passenger train car 90 Average load factor (percentage of seats filled) 70% Average full passenger fare $ 160 Average variable cost per passenger $ 70 Fixed operating cost
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(Exhibit 6: Total Revenue and Cost) The most profitable level of output occurs at quantity: | A) | F. | B) | K. | C) | L. | D) | M. | Ans: | D | Exhibit 7 | | 8. | (Exhibit 7: Total Revenue‚ Total Costs‚ and Economic Profit) Total revenue and total cost are equal at approximately _______ pounds and $_______ . | A) | 2‚000; 1‚400 | B) | 5‚000; 1‚600 | C) | 10‚000; 2‚800 | D) | 15‚000‚2‚800 | Ans: | C | | | 9. | (Exhibit 7: Total Revenue‚ Total Costs‚
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Football Stadium Recommendation The residents of Springfield have a big decision to make; “Springfield finally has a surplus in the budget after years of being in debt‚ and all citizens have to decide if building a new NFL stadium is a good investment of their tax dollars.” Building the stadium would initially cost the taxpayer’s $90 million dollars‚ but “the team promises that the voters will be paid back the money to build a new stadium through tax revenues that the new stadium will generate.” Even non-sports
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products for sale.” There are several pricing objectives that a business can model after‚ each have pro and cons. A business that sets prices to maximize profit is using the profit-maximizing objective. A business trying to dominate the market is using the market share objective. A business using the profit-maximizing objective has to plan carefully. If prices are set low the company will sell many items but miss out on additional profit. If prices are set high the company will make a large profit
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