Class 4-20100

Class 4-20100 - Managerial Economics Class 4 Tuesday, Sept....

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 THE UNIVERSITY OF BRITISH COLUMBIA 1. General Comments 2. Analyzing Apple’s Pricing Decision Using Regression Analysis 3. Assessing a Regression 4. Introduction to Consumer Choice 5. Indifference Curves 6. The Budget Line 7. Summary and Conclusion. Managerial Economics Class 4 –Tuesday, Sept. 21 THE UNIVERSITY OF BRITISH COLUMBIA 1. General Comments 1. Old Exams and Assignments 2. In Chapter 3 you are required to read only 3.1, 3.2 and the managerial problem (Apple). 3. Is our model of supply demand too simple to apply issues related to petroleum and natural gas? What makes a good model or theory?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 THE UNIVERSITY OF BRITISH COLUMBIA 2. Analyzing Apple’s iTunes Price Change Estimated demand curve: Q = 1024 – 413p. At a price of 1.24 the predicted quantity is 1024 – 413*1.24 = 512. The expected revenue is 1.24*512 = $635. The revenue at 0.99 is 0.99*615 = $609. Raising price caused revenue to rise. This is consistent with what happened with Akon’s “Beautiful”. Price Quantity 1.49 441 1.29 493 1.19 502 1.09 536 0.99 615 0.89 643 0.79 740 0.69 757 0.49 810 THE UNIVERSITY OF BRITISH COLUMBIA Clicker Question 1. Assume there are no cost effects as the number of downloads changes. The estimated demand curve indicates that for prices between 1.00 and 2.00 a. Raising price always causes revenue to rise. b. Raising price always causes revenue to fall. c. Raising price might cause quantity demanded to fall or rise. d. Raising price would cause demand to become less elastic. e. None of the above
Background image of page 2
3 THE UNIVERSITY OF BRITISH COLUMBIA Effect of a price change on quantity and revenue for Apple THE UNIVERSITY OF BRITISH COLUMBIA Clicker Question 2 Suppose a curve is given by Q = 20 – 5p. a)The price elasticity of demand is -1 at p = 1. b)The price elasticity of demand is -1 at p =2. c)At p = -2 a small decrease in price would raise revenue.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 10

Class 4-20100 - Managerial Economics Class 4 Tuesday, Sept....

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online