This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: A reduction in the price charged for luncheon specials by a downtown cafeteria will A) affect the ... (Read 37 times)

TFauchery

  • Hero Member
  • *****
  • Posts: 500
on: Jun 29, 2018
A reduction in the price charged for luncheon specials by a downtown cafeteria will
 
  A) affect the demand (curve) for that cafeteria's luncheons if its competitors react.
  B) have no effect on the demand for lunch at other downtown restaurants.
  C) increase the cafeteria's gross revenue from lunch business.
  D) increase the cafeteria's net revenue from lunch business if the demand is elastic.
  E) increase the cafeteria's net revenue from lunch business if the demand is inelastic.

Question 2

Consider two individuals, Kevin and Harris, who discount delayed utilities with a weight of 1/2 and 3/4, respectively.
 
  a) Who between the two individuals gives more weight to things that happen in the future?
  b) If consuming ice cream gives both Kevin and Harris benefits worth 8 utils instantly and has delayed costs of 15 utils, then comment on whether both individuals will want to consume ice cream.
  c) If the nearby ice cream parlor is closed for a week, will Kevin and Harris prefer to eat ice cream after a week, given that they have to decide today?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

makaylafy

  • Sr. Member
  • ****
  • Posts: 347
Reply #1 on: Jun 29, 2018
Answer to Question 1

A

Answer to Question 2

a) The greater the discount weight of an individual, the more importance he gives to things that happen in the future. In this case, Harris has a discount weight of 3/4 while Kevin has a discount weight of 1/2. Therefore, Harris gives more weight to things that happen in the future.

b) The net benefit that Kevin will derive from consuming ice cream = 8 - 1/2(15 ) = 8 -7.5 = 0.5. Because the net benefit is positive, Kevin will want to consume ice cream.
The net benefit that Harris will derive from consuming ice cream = 8 - 3/4(15 ) = -3.25. Because the net benefit is negative, Harris will not want to consume ice cream.

c) If the consumption of ice cream is delayed by a week, the benefit the individuals receive from consumption will also have to be discounted.
Kevin's net benefit from consuming ice cream after a week = 1/2(8 - 15 ) = -3.5. Therefore, Kevin will decide not to consume ice cream after a week.
Harris's net benefit from consuming ice cream after a week = 3/4(8 - 15 ) = -5.25. Therefore, Harris will decide not to consume ice cream after a week.


TFauchery

  • Member
  • Posts: 500
Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

  • Member
  • Posts:
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

For high blood pressure (hypertension), a new class of drug, called a vasopeptidase blocker (inhibitor), has been developed. It decreases blood pressure by simultaneously dilating the peripheral arteries and increasing the body's loss of salt.

Did you know?

Eat fiber! A diet high in fiber can help lower cholesterol levels by as much as 10%.

Did you know?

There are over 65,000 known species of protozoa. About 10,000 species are parasitic.

Did you know?

Your skin wrinkles if you stay in the bathtub a long time because the outermost layer of skin (which consists of dead keratin) swells when it absorbs water. It is tightly attached to the skin below it, so it compensates for the increased area by wrinkling. This happens to the hands and feet because they have the thickest layer of dead keratin cells.

Did you know?

Many supplement containers do not even contain what their labels say. There are many documented reports of products containing much less, or more, that what is listed on their labels. They may also contain undisclosed prescription drugs and even contaminants.

Affect. Affect.
Wheat and Cotton Prices and Consumer Price Indexes, 1865–1896 Wheat and Cotton Prices and Consumer Price Indexes, 1865–1896
How to create a price index to calculate inflation for a basket of goods How to create a price index to calculate inflation for a basket of goods
Chemicals can adversely affect personal protective equipment (PPE) in three ways: They can permeate ... Chemicals can adversely affect personal protective equipment (PPE) in three ways: They can permeate ...
The price of rice in a small country is currently $6 per pound. In order to help low-income ... The price of rice in a small country is currently $6 per pound. In order to help low-income ...
Sonal bought a coat for $198.88, which included 8% PST and 5% GST. What was the selling price ... Sonal bought a coat for $198.88, which included 8% PST and 5% GST. What was the selling price ...
Video: The Nerve Impulse

For a complete list of videos, visit our video library