Course Hero Logo

HW_1 Solutions.pdf - Managerial Economics Indian School of...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 2 out of 8 pages.

Managerial EconomicsIndian School of BusinessDHM 1, 2021-22HOMEWORK 1Answer KeyProblem 1A computer products retailer purchases laser printers from a manufacturer at a price of Rs. 25,000 per printer.During the year, the retailer will try to sell the printers at a price greater than Rs. 25,000, but may not be able tosell all the printers. At the end of the year, the manufacturer will buy back any unsold inventory at 40 percent ofthe original price. No one other than the manufacturer would be willing to buy these unsold printers at the endof the year.a)At the beginning of the year, before the retailer has purchased any printers, what is the opportunity costof a laser printer?
b)After the retailer has purchased the laser printers, what is the opportunity cost associated with selling alaser printer to a customer? (Assume that if this customer does not buy the printer, it will be unsold atthe end of the year.)
c)Suppose that at the end of the year, the retailer still has a large inventory of unsold printers. The retailerhas set a retail price of Rs. 30,000 per printer. The manager of the store proposes that they should cutthe price by half and sell the printers at Rs. 15,000 each. The owner of the store disagrees, pointing outthat at Rs. 15,000 each, they would lose Rs. 10,000 on each printer sold. Is the owner’s argumentcorrect?

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 8 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Spring
Professor
Bruce Allen, Tarun Jain
Tags
Supply And Demand, d, Sandhya

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture