Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

As the new owner of a supermarket, you have inherited a large inventory of unsold imported Limburger cheese, and you would like to set the

image text in transcribed

As the new owner of a supermarket, you have inherited a large inventory of unsold imported Limburger cheese, and you would like to set the price so that your revenue from selling it is as large as possible. Previous sales figures of the cheese are shown in the following table. Price per Pound, p $3.00 $4.00 $5.00 Monthly Sales, q (pounds) 407 286 226 (a) Use the sales figures for the prices $4 and $5 per pound to construct a demand function of the form q = Ae-bp, where A and b are constants you must determine. (Round A and b to two significant digits.) 9 = 800e-0.25p X (b) Use your demand function to find the price elasticity of demand at each of the prices listed. (Round your answers to two decimal places.) p = $3 E = 0.75 x E = 1 X p = $4 p = $5 E = 1.25 X (c) At what price should you sell the cheese to maximize monthly revenue? (Round your answer to the nearest cent.) $ (d) If your total inventory of cheese amounts to only 200 pounds and it will spoil one month from now, how should you price it to receive the greatest revenue? (Round your answer to the nearest cent.) $ Is this the same answer you got in part (c)? If not, give a brief explanation. It is the same price. It is a lower price than in part (c) because at a higher price, the demand is not high enough. It is a higher price than in part (c) because at a lower price, you cannot satisfy the demand. As the new owner of a supermarket, you have inherited a large inventory of unsold imported Limburger cheese, and you would like to set the price so that your revenue from selling it is as large as possible. Previous sales figures of the cheese are shown in the following table. Price per Pound, p $3.00 $4.00 $5.00 Monthly Sales, q (pounds) 407 286 226 (a) Use the sales figures for the prices $4 and $5 per pound to construct a demand function of the form q = Ae-bp, where A and b are constants you must determine. (Round A and b to two significant digits.) 9 = 800e-0.25p X (b) Use your demand function to find the price elasticity of demand at each of the prices listed. (Round your answers to two decimal places.) p = $3 E = 0.75 x E = 1 X p = $4 p = $5 E = 1.25 X (c) At what price should you sell the cheese to maximize monthly revenue? (Round your answer to the nearest cent.) $ (d) If your total inventory of cheese amounts to only 200 pounds and it will spoil one month from now, how should you price it to receive the greatest revenue? (Round your answer to the nearest cent.) $ Is this the same answer you got in part (c)? If not, give a brief explanation. It is the same price. It is a lower price than in part (c) because at a higher price, the demand is not high enough. It is a higher price than in part (c) because at a lower price, you cannot satisfy the demand

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Federal Budget Politics Policy Process

Authors: Allen Schick

3rd Edition

0815777353, 9780815777359

More Books

Students also viewed these Accounting questions

Question

How can speakers manage speaking anxiety?

Answered: 1 week ago

Question

To what extent is public speaking similar to conversation?

Answered: 1 week ago