Question
In: Economics
Amalgamated Popcorn, Inc. is a fairly small firm selling bags of flavored gourmet popcorn in a...
Amalgamated Popcorn, Inc. is a fairly small firm selling bags of flavored gourmet popcorn in a popular mall. As shop owner and operator, you have observed that your daily sales tend to follow a pattern that can be stated as:
QP = 500 - 100PP + 1.25A -
20PS + 2I
where QP = unit sales of popcorn bags, PP =
price of bags in dollars, A = advertising expenses, PS =
price of soda pop sold at your stand in dollars, I = per capita
income of customers in thousands of dollars.
You are currently charging $1 per bag of popcorn, spending $200 in
advertising, charging $1 for a soda pop, and per capita income is
$22,000.
a. Compute the elasticity coefficients for price,
income, and cross-price.
b. You are currently paying $.45 for popcorn
(including cost for the corn, cost to pop, and bag) and currently
charging $1 per bag of popcorn. Is this the profit-maximizing
price? Explain.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Amalgamated Popcorn, Inc. is a fairly small firm selling bags of flavored gourmet popcorn in a...
Amalgamated Popcorn, Inc. is a fairly small firm selling bags of
flavored gourmet popcorn in a popular mall. As shop owner and
operator, you have observed that your daily sales tend to follow a
pattern that can be stated as:
QP = 500 - 100PP + 1.25A - 20PS + 2I
where QP = unit sales of popcorn bags, PP = price of bags in
dollars, A = advertising expenses, PS = price of soda pop sold at
your stand...
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Comparable Public Firm XYZ
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Project
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Beta 1.7
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