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# BUS640 Grading Rubric Assignment: Consumer Demand Analysis and Estimation Applied Problems Please, complete the following 3 applied problems in a...

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BUS640 Grading Rubric Assignment: Consumer Demand Analysis and Estimation Applied Problems Please, complete the following 3 applied problems in a Word or Excel document. Show all your calculations and explain your results. Submit your assignment in the drop box by using the Assignment Submission button. 1. Roshima is researching universities where she could study for her MBA degree. She is considering 3 major attributes that she considers important in her choice: ranking, price, and location. The value she places on each attribute, however, differs according to whether she remains full-time employed during her studies or quits her job and focuses on her degree. If she continues to work full time and takes all her courses online, then ranking is the most important attribute, twice as important as price and three times as important as location. If she quits her job and attends school full time, then location becomes three times as important as ranking and twice as important as price. She is considering two universities, respectively, the MBA program at Arizona State University (ASU) and the MBA program at University of Phoenix (UOP), both of which are priced at approximately \$25,000. She has rated each attribute on a scale of 1 to 100 for each of the two schools. a. Which of the two options should Roshima pursue of she wants to keep her full-time job? (Calculate the total expected utility from each school option and compare. Graph is not required) b. Which of the two options should she pick if she plans to quit her job and dedicate to her studies? c. Which option should she pursue if the probability of being laid off and unable to find a new job is estimated as 0.6? Show your calculations and explain your reasoning. 2. The demand function for Einstein Bagels has been estimated as follows: Qx = -15.87 – 40.73Px + 84.17Py + 0.55Ax where Qx represents thousands of bagels; Px is the price per bagel; Py is the average price per bagel of other brands of bagels; and Ax represents thousands of dollars spent advertising Einstein Bagels. a. Calculate the price elasticity of demand for Einstein’s Bagels and explain what it means. Attribute ASU UOP Ranking Location Price 80 50 45 70 70 45
2 b. Derive an expression for the (inverse) demand curve for Einsteins’s Bagels. c. If the cost of producing Einstein’s Bagels is constant at \$0.10 per bagel, should they reduce price and thereafter, sell more bagels (assume profit maximization is the company’s goal)? d. Should Einstein Bagels spend more on advertising? 3. The consulting firm that you work for has been hired by the US Government to provide an independent analysis of the demand-side effects of a contemplated increase in the tax on gasoline. They provide you with a data set relating to the period 1962-1987, which they say contains valuable historic lessons relating to the impact of volatile pump prices due to the supply restrictions imposed by the Organization of Petroleum Exporting Countries (OPEC), and the Corporate Average Fuel Economy (CAFE) regulations that required car manufacturers to increase the fuel efficiency of the cars they sold, while at the same time Real Disposable Income (RDI) per capita was rising, the number of passenger cars (NPC) almost doubled, and inflation was pushing up the Consumer Price Index (CPI). Year Q Dx P x NPC MPG RDI CPI 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1084 1985 1986 1987 43,771 45,246 47,567 50,273 53,312 55,110 58,524 62,448 65,784 69,514 73,463 78,011 74,217 76,457 78,847 80,677 83,233 80,233 73,375 71,718 72,848 73,156 71,180 69,450 71,404 70,984 20.36 20.11 19.98 20.70 21.57 22.55 22.93 23.85 24.55 25.20 24.46 26.88 40.41 45.44 47.44 50.70 53.09 74.33 104.73 112.75 102.65 95.36 91.46 89.64 63.63 66.33 66,638 69,842 72,969 76,634 80,106 82,367 85,793 89,156 92,095 96,144 100,658 106,119 109,823 111,679 115,170 118,711 121,717 125,750 127,448 129,123 129,500 131,723 133,751 137,308 140,693 142,209 14.37 14.26 14.25 14.15 14.10 14.05 13.91 13.75 13.70 13.73 13.67 13.29 13.65 13.74 13.93 14.15 14.26 14.49 15.32 15.68 16.36 16.81 17.80 18.28 18.35 19.29 6,271 6,378 6,727 7,027 7,280 7,513 7,728 7,891 8,134 8,322 8,562 9,042 8,867 8,944 9,175 9,381 9,735 9,829 9,722 9,769 9,725 9,930 10,419 10,662 10,947 10,976 90.6 91.7 92.9 94.5 97.2 100.0 104.2 109.8 116.3 121.3 125.3 133.1 147.7 161.2 170.5 181.5 195.4 217.4 246.8 272.4 289.1 298.4 311.1 322.2 328.4 340.4
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a) To keep full time job, ASU school Ratios Ranking 80 50 45 Ranking Location Price Total expected utility = UOP school Ratios Ranking Location Price Total expected utility = 1/2 2/7 1/5 40 15 9 64...

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