Economic Forecasting. Assume you are a cartoon artist at a local theme park. At your current...

Economic Forecasting. Assume you are a cartoon artist at a local theme park. At your current price, $8.50, you sell 500 sketches a month. As a result of a $1.00 price increase sales reduced by 100 sketches.

What is the demand elasticity of your sketches? Interpret your results.
Assume your marginal cost is $4. What is your desired margin and your current margin? Interpret these numbers.
Was your price strategy profitable? Why or why not?

Expert Solution

The price elasticity of demand for the sketches is 1.7 it means greater than 1. It is termed as high elastic demand, this is beneficial in case of price cut and will have an adverse effects when price is increased as the case of given problem.

Margin is generally calculated per unit as followes (Price-Marginal cost), you also calculate margin or profit on all the units demanded..

This price strategy of price increase will not be profitable for the sketch artist in the given case as it will reduce the total revenue as well as total profit margin on total sales.

Rahul Sunny answered 3 years ago

Please answer/discuss the following questions? Assume you are the RM for a newly opened theme park...

Please answer/discuss the following questions? Assume you are the RM for a newly opened theme park in a major southwestern city. Your guests will consist primarily of families visiting the park, as well as schoolchildren on field trips and church youth groups. Yours is the only such park within 150 miles. Identify at least five non-cost factors you would want to consider as you determine the prices that will be charged for the menu items you will sell. Explain why...

Question 2 (20 marks) – ALL CALCULATIONS MUST BE SHOWN A local theme park is losing...

Question 2 – ALL CALCULATIONS MUST BE SHOWN A local theme park is losing money. The current price of admission is $60 per person with an average daily attendance of 750 people. You are an independent consultant employed to recommend a pricing strategy. The demand schedule estimated by the consultant is shown in the table below. Price Quantity of tickets sold per day Elasticity 0 1200 -- 20 1050 40 900 60 750 80 600 100 450 120 300 140...

You and a group of friends are planning to visit a theme park, which charges $60...

You and a group of friends are planning to visit a theme park, which charges $60 for admission, $80 for a two-day pass, and $90 for a three-day pass. Your friends are interested in spending a lot of time there, but they’re worried about paying a lot of money. You explain the concept of marginal cost, which helps them see that the additional day is a good value. 1. The average cost per day of a three-day pass is $ per person....

Assume your local congressman calls you for some economic advice. He wants to sponsor legislation to...

Assume your local congressman calls you for some economic advice. He wants to sponsor legislation to increase public spending on such common medical interventions as because he’s been told early detection saves money: Getting all children the right immunizations at the right time, before they turn 24 months, Screening for hypertension Screening for cervical cancer Smoking cessation classes How would you advise him?

On your 21st birthday, your uncle told you that in the current volatile economic climate you...

On your 21st birthday, your uncle told you that in the current volatile economic climate you should read Capitalizing Astutely, a monthly journal. He tells you to choose. He would pay for the subscription annually, $89.99, beginning immediately or pay for a lifetime subscription of $950. Assuming that he can earn 5% on his funds and that the annual renewal rate will remain constant, how old will you be when the lifetime subscription is a better buy? (Hint: if you...

Assume you are employed as a counselor at your local high school. You need to conduct...

Assume you are employed as a counselor at your local high school. You need to conduct a 30-minute interview with a student who has suddenly had a dramatic decline in her grades. Prior to conducting any interview, it is extremely important to plan its structure, the type of information you hope to acquire, the timing and sequencing of the interview, and the types of questions you might want to ask. To prepare for the interview, analyze the structure of the...

In the current economic environment, if you had to allocate 20% of your portfolio of $1.0...

In the current economic environment, if you had to allocate 20% of your portfolio of $1.0 Billion to Alternative Investments, what type of investment strategies you will select (specify, i.e. Distressed Hedge Funds) and why (provide reason).

What are the steps to planning a project? Forecasting is critical. Assume you are starting a...

What are the steps to planning a project? Forecasting is critical. Assume you are starting a project to develop widgets. How would you start teh planning and forecasting process?

Assume you have found a USB memory stick in a car park, and you plugged the...

Assume you have found a USB memory stick in a car park, and you plugged the USB memory stick to your computer. Answer the following questions 1. What are the security key objectives that could be threaten? 2. Identify and define three types of malware, and give examples about how could they transported from the USB memory stick to your computer. 3. What could you do to mitigate the security threats and use the contents of the USB memory stick safely?

Assume that effective forecasting requires a combination of technique, system support, and administration. Your supervisor in...

Assume that effective forecasting requires a combination of technique, system support, and administration. Your supervisor in your consumer products firm has requested that you identify some initiatives to enhance forecast accuracy. What specific initiatives would you recommend for consideration regarding the technique, system support and administration components?

Question