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Homework Chapter 11-13

Homework Chapter 11-13 - Universidad Iberoamericana UNIBE...

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Universidad Iberoamericana UNIBE BBA in International Business Microeconomics Professor Osvaldo Lagares Homework Chapter 8-10 Valerie Bodden Kluge (10-0014) Maria Gabriella Liriano (09-0881) Joaquin Castillo ( November 12, 2010 Santo Domingo, Dominican Republic

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Chapter 12 1.4) Complete the following table. Dvds Rented per Week Price Total Revenue Average Revenue Marginal Revenue 0 8.00 0 n/a n/a 1 7.50 7.50 7.50 7.50 2 7.00 14.00 7.00 6.50 3 6.50 19.50 6.50 5.50 4 6.00 24.00 6.00 4.50 5 5.50 27.50 5.50 3.50 6 5.00 30.00 5.00 2.50 7 4.50 31.50 4.50 1.50 8 4.00 32.00 4.00 0.50 2.5) Maria manages a Hollywood Video store and has the following information on demand and cost: a) To maximize profit, how many DVDs should Maria rent, what price should she charge, and how much profit will she make? Dvds Rented per Week Price Total Revenue Marginal Revenue Total Cost Marginal Cost 0 6.00 0 n/a 3.00 n/a 1 5.50 5.50 5.50 7.00 4.00 2 5.00 10.00 4.50 10.00 3.00 3 4.50 13.50 3.00 12.50 2.50 4 4.00 16.00 2.50 14.50 2.00 5 3.50 17.50 1.50 16.00 1.50 6 3.00 18.00 0.50 17.00 1.00 7 2.50 17.50 -0.50 18.50 1.50 b) What is the marginal revenue received by renting cost of renting the profit- maximizing DVD? Marginal revenue is \$1.50. It is also the same as the marginal cost of renting it.

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2.6) S uppose a firm producing table lamps has the following costs, Evaluate the discussion between these two managers. There Is not enough information about the company’s revenue in order to calculate the profit-minimizing quantity. 2.11 ) I n 1916, the Ford Motor Company produced 500,000 model T Fords at a price of \$440 each. The company made a profit of \$60 million that year. Henry Ford told the newspaper reporter that he had intended to reduce the price of the model T to \$360, and he expected to sell 800,000 cars at that price. Ford said, “Less profit on each car, but more cars, more employment of labor, and in the end we get all the total profit we ought to make.” a) Did Ford expect total revenue from selling model T’s to rise or fall following the price cut? Revenue after price cut= (360)(800,000)= 288,000,000 b) Use the information given above to calculate the price elasticity of demand for model T’s, use the midpoint of the formula to make your calculation.
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Homework Chapter 11-13 - Universidad Iberoamericana UNIBE...

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