The Sandy Deli operates near a college campus. It has been selling 325 sandwiches a day at $1.75 each and is considering a price cut. It estimates 450 sandwiches would sell per day at $1.50 each. Calculate the marginal revenue of such a price cut and the elasticity between the two points
Revenue is currently 325 × $1.75 = $568.75 . Revenue at the new price is 450 × $1.50 = $675 . The marginal revenue is $675 ? $568.75 = $106.25 . Elasticity is (% DQ)/(% DP) = [125/387.5]/[.25/1.625] = 2.097.
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Consider a two-country, two-commodity model. The table below shows the units of Good X and Good Y produced in Country A and Country B per labor hour. Which of the following statements is true? ProductivityCountry ACountry BGood X1.000.50Good Y0.200.70
A. Country B has an absolute advantage in the production of Good X. B. Country A has an absolute advantage in the production of both Good X and Good Y. C. Country B has an absolute advantage in the production of both Good X and Good Y. D. Country A has an absolute advantage in the production of Good X.
Suppose a monopolist has costs such that when output is 500 units per hour, average costs are $3. If the monopolist is regulated by a policy of average-cost pricing, the monopolist will charge a price of:
A. $3. B. $3 only if the quantity demanded is 500 units per hour at a price of $3. C. $3 only if the quantity demanded is greater than 500 units at a price of $3. D. $3 only if the quantity demanded is less than 500 units per hour at a price of $3.
Refer to the information provided in Table 14.5 below to answer the question that follows. Table 14.5B's Strategy ?AdvertiseDon't Advertise??A's profit $200 millionA's profit $400 million?AdvertiseB's profit $200 millionB's profit $100 millionA's Strategy????Don'tA's profit $100 millionA's profit $150 million?AdvertiseB's profit $400 millionB's profit $150 millionRefer to Table 14.5. Firm A's dominant strategy is to not advertise.
Answer the following statement true (T) or false (F)
Open market sales of bonds by the Federal Reserve reduce the money supply and
a. reduce aggregate expenditures b. increase real aggregate expenditures c. are helpful in monetizing the federal debt d. stimulate purchases of consumer durables e. stimulate spending at many levels