Aree has a smoothie business. The average price of smoothies in her city rises, and this encourages Ar price and the quantity that she produces. Her response to the price increase is an example of price func a. message. b. incentive. c. reflex. d. bundle of information.
Added by Claudia A.
Close
Step 1
The question involves Aree's smoothie business and how she responds to price increases in the market, which is being described as an example of a price function. Show more…
Show all steps
Your feedback will help us improve your experience
Breanna Ollech and 87 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
The market for smoothies is perfectly competitive. The table in the next column sets out the market demand schedule. $$\begin{array}{cc} \begin{array}{c} \text { Price } \\ \text { Idollars per smoothie] } \end{array} & \begin{array}{c} \text { Quantity demanded } \\ \text { (smoothies per hour) } \end{array} \\ \hline 1.90 & 1,000 \\ 2.00 & 950 \\ 2.20 & 800 \\ 2.91 & 700 \\ 4.25 & 550 \\ 5.25 & 400 \\ 5.50 & 300 \end{array}$$ Each of the 100 producers of smoothies has the following costs when it uses its least-cost plant: $$\begin{array}{cccc} & & \text { Average } & \text { Average } \\ \text { Output } & \text { Marginal cost } & \text { variable cost } & \text { fotal cost } \\ \begin{array}{c} \text { (smoothies } \\ \text { per hour) } \end{array} & \begin{array}{c} \text { (dollars per } \\ \text { additional smoothie) } \end{array} & \text { (dollars per smoothie) } \\ \hline 3 & 2.50 & 4.00 & 7.33 \\ 4 & 2.20 & 3.53 & 6.03 \\ 5 & 1.90 & 3.24 & 5.24 \\ 6 & 2.00 & 3.00 & 4.67 \\ 7 & 2.91 & 2.91 & 4.34 \\ 8 & 4.25 & 3.00 & 4.25 \\ 9 & 8.00 & 3.33 & 4.44 \end{array}$$ a. What is the market price of a smoothie? b. What is the market quantity of smoothies? c. How many smoothies does each firm sell? d. What is the economic profit made or economic loss incurred by each firm?
Price Comparison of Smoothie Blenders. A personal fitness company produces both a deluxe and a standard model of a smoothie blender for home use. Selling prices obtained from a sample of retail outlets follow. a. The manufacturer's suggested retail prices for the two models show a $\$ 10$ price differential. Use a .05 level of significance and test that the mean difference between the prices of the two models is $\$ 10$. b. What is the $95 \%$ confidence interval for the difference between the mean prices of the two models?
Izzy Ice Cream has the following price and cost information: Price per 2-scoop sundae: $5.00 Variable cost per sundae: Ingredients: $1.35 Direct labor: $0.45 Overhead: $0.20 Fixed cost per month: $6,600 Required: 1. Determine Izzy's break-even point in units and sales dollars. 2. Determine how many sundaes must be sold to generate a profit of $13,200. 3. Calculate Izzy's new break-even point for each of the following independent scenarios: a. Sales price decreases by $0.50. b. Fixed costs decrease by $300 per month. c. Variable costs increase by $0.50 per sundae. 4. Based on the original information, how many sundaes must Izzy sell to generate a profit of $34,000, if the sales price increases by $0.50 and variable costs increase by $0.30?
Madhur L.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD