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is a U.S. manufacturer of digital controls




#1;Digimill, Inc., is a U.S. manufacturer of digital controls for milling machines. The firm;has been exporting its least expensive model, which sells for US$1,500, to Mexico;where the demand has proved to be Q=3,500-2P, where Q= quantity demanded and;P=price. Digimill wants to break into the South American markets in Brazil, Argentina;and Chile. If the demand in each of these countries is the same as in Mexico;A. How many machines can Digimill sell in all three countries?;B. At a price of $1,500, what will be the total revenue, TR, from sales in all three;countries?;C. What is the price elasticity of demand in each country when the price is $1,500?;Would a price increase of 10 percent increase total revenue?;D. If the price is $1,500, what will be the marginal revenue, MR, in each country?;E. How many units must Digimill sell in each country in order to maximize revenue?;What would be the price?;F. Show that price elasticity equals -1.0 when total revenue is maximized.;In order to solve the problem we know that: MR=3500-4p;#2 Market Equilibrium;The following tables give the demand and supply for widgets?;Demand;Price;$0.50;1.00;1.50;2.00;2.50;3.00;Supply;Quantity;10;9;8;7;6;5;Price;$0.50;1.00;1.50;2.00;2.50;3.00;Quantity;3;4;5;6;7;8;A. What quantity is sold at equilibrium and at what price?;B. Formulate the demand and supply curves assuming that they are both linear functions;based on the information given.;C. Suppose that a sales tax of $1.50 is imposed on per unit of widgets. What will be the;new market price and sales level (use the relevant mathematical equations to;answer this question)? What price do suppliers actually collect? What price do;buyers actually pay (draw the appropriate diagram when answering this;question)?;D. Suppose instead of a sales tax an excise tax of $1.50 is imposed. Answer all the;segments of part (C) question for this section once again (draw the appropriate;diagram when answering this question).;#3;Comparative Statistics: Demand for refrigerators is often described as cyclical, and very;sensitive to refrigerator prices and interest rates. Given these characteristics, describe the;effect of each of the following in terms of whether it would increase or decrease the;quantity demanded/supplied or the demand/supply for refrigerators. Moreover, when;price is expressed as a function of quantity, indicate whether the effect of each of the;following is an upward or downward movement along a given curve or instead involves;an upward or downward shift in the relevant demand/supply for refrigerators. Please give;your answers in writing and with use of relevant diagrams and indicate what will;happen to the price and the quantity of equilibrium sales under each circumstance.;a);b);c);d);An increase in interest rates;A severe economic recession;An increase in income of middle income Americans;Workers succeeding to form a labor union in many refrigerator plants around the;country;e) Increased competition among the domestic producers and the foreign imports;following the approval of accepting China as a member of WTO.


Paper#27079 | Written in 18-Jul-2015

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