An electrical discount store selling hi-fi equipment noticed that during the previous years their Arden 30 watt speakers had sold at a steady average of 200 a month throughout the year. However during June and September, sales had dropped to only 120 units per month. These slack periods seemed to coincide with the months when special offers on the Imai 30 watt speakers brought down the prices from $200 to $160.
A) What is the cross elasticity of demand between Arden and Imai speakers? Does the demand indicate any clear relationship between the two types of speakers?
B) If the retailer wished to promote Arden speakers, what would you predict for that type of speaker if the prices of Imai speakers were raised to $220 from their usual $200?
AvtoFlight Manufacturing is currently having 25% production. The Total Fixed Cost is $2,000,000…the Variable Cost per Unit includes the following:
Direct Raw Material=$40;
Direct Labor=$30;
Variable Overhead=$10..
The Selling Price per Unit is $50.
The company’s 100% capacity is 1,000,000 units
BLTB Co. would like to order 50,000 units and is asking for a 5% discount on price per unit
Brasilia GmbH is ordering 100,000 units and is asking for a 10% discount on price per unit
Batakero Enterprises would like to tender 200,000 units at 20% discount on price per unit
diskettes? When did you go to college? Econ is next quarter for me, sadly. Boo econ!
__________________ Chief Engineer for Club MoFo
Can I put a turbo in my non-turbo? Yes. The trunk is quite large.
Can I put a Supercharger in my Z31?Yes. You can probably put it next to the turbo.
Can I put a Z32/newer 300ZX/VG30DETT in my Z31? This one is iffy. You'd have to disassemble it to get it in the trunk.
A) What is the cross elasticity of demand between Arden and Imai speakers? Does the demand indicate any clear relationship between the two types of speakers?
Yes
Quote:
B) If the retailer wished to promote Arden speakers, what would you predict for that type of speaker if the prices of Imai speakers were raised to $220 from their usual $200?
A) What is the cross elasticity of demand between Arden and Imai speakers? Does the demand indicate any clear relationship between the two types of speakers?
I don’t remember how to do the elasticity thing. I think its ED1/ED2 or something like that.
The relationship is that of a substitute good. When consumers see that the price of Imai speakers have gone down, they substitute the Imai speakers for the Arden speakers for the months of June and September when the Imai speakers were on sale/discount.
B) If the retailer wished to promote Arden speakers, what would you predict for that type of speaker if the prices of Imai speakers were raised to $220 from their usual $200?
The opposite will occur. A higher price of Imai speakers will result in consumers shifting their demand for Arden speakers. But this depends on the price of the Arden units. If Arden units have a price lower than the new price of the Imai speakers, then yes, sales of Arden speakers will rise.
PS, I will have a BA in Economics in May '04. I better be right.
__________________
"The greatest trick the devil ever pulled was convincing the world he didn't exist".
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