Author Question: In this problem, demonstrate your knowledge of percentage rates of change of an entire demand ... (Read 67 times)

lb_gilbert · **on:** Jul 1, 2018

In this problem, demonstrate your knowledge of percentage rates of change of an entire demand function (HINT: Q = EPP + EYY). You have found that the price elasticity of motor control devices at Allen-Bradley Corporation is -2, and that the income elasticity is a +1.5 . You have been asked to predict sales of these devices for one year into the future. Economists from the Conference Board predict that income will be rising 3 over the next year, and AB's management is planning to raise prices 2. You expect that the number of AB motor control devices sold in one year will:
a. fall .5.
b. not change.
c. rise 1r.
d. rise 2.
e. rise .5.

Question 2

Smartphones at Work In most departments, Macy's clerks are paid an hourly rate. As a consequence, they would prefer to spend the time goofing off than helping customers. The store developed a number of policies to combat this preference. For example, supervisors roam the store breaking up congregations of employees who are gossiping. However, with the advent of smartphones, employees can pass the time surfing the web, playing games, or posting to social media. How can Macy's alter compensation so as to combat this new form of shirking?

l.stuut · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

e

Answer to Question 2

Macy's could convert more positions from hourly wage compensation to commission compensation. Employees on commission now face reduced sales, and thus incomes, when they spend time on their smartphones at work. They had not converted these positions earlier probably because it is a more expensive form of compensation for Macy's. However, with the improved shirking technology, it may be cheaper than hourly workers of reduced productivity.