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October 20, 2014

Homework Help: Managerial Economics/Math

Posted by klynn on Tuesday, September 25, 2007 at 10:53am.

This is an MBA-level Managerial Economics course. I am working on a homework assignment and have a couple problems that I don't really know how to get started. Here is the first:

Altmann, Inc. is a U.S. manufacturer of edible econimics texts. The firm has been exporting its least expensive model (the cherry flavored introductory microeconomics text), which sells for U.S. $1,500 to Mexico, where the demand has proven to be:

Q = 3500 - 2P

Where Q = quantity demanded and P = price. Altmann 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 Mexico,

a.) How many texts can Altmann expect to sell in all three countries at a price of $1500?

b.) What will the total revenue, TR, be from sales in all three countries at $1500?

c.) What is the point price elasticity of demand in each country when the price is $1500? Would a price increase of 10% be advisable? (Assume that elasticity remains constant for the price increase.)

d.) What is the MR at a price of $1500 in each country?

e.) How many units should ALtmann sell in each country to maximize revenue? What price should he charge?

f.) Show that price elasticity equals -1.0 when total revenue is maximum.

If someone could at least tell me where to get started (i.e. which formulas I should be using, etc.) I would greatly appreciate it. Thanks!

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