# Managerial Economics

posted by .

Auto Maintenance Services (AMS) is a small auto service outlet in a suburban area of Syracuse. In reaction to a small increase in wages that has caused the marginal cost of this auto service establishment to increase from \$25 to \$30, the owner is considering raising the prices of the services AMS offers. The owner's daughter, who is studying economics and takes care of her father's books and finances advises him against that. She has estimated that if AMS raises its prices it will face the weekly demand curve Q = 140 - 2.5 P, whereas if it lowers its price it will face the demand curve Q'= 55-.625P.

a. Determine the (average) price AMS is charging for its services, presently.
b. Determine the number of cars it services each week.
c. Using the point price elasticity formula, calculate the elasticity measures of the demand AMS faces at its present (average) price.
d. Assuming that the owner's daughter is correct, what is the MC range within which AMS should not change its price?
e. AMS's weekly total fixed cost is \$250. Assuming that the firm's marginal cost and average variable cost are equal (AVC =MC), determine its weekly profit after the wage increase.
f. What should AMS do if its MC goes up to \$40? Explain.

What type of market is AMS in? Perfectly competitive, monopolistically competitive, oligopoly, or monopoly?

We are studying oligopolies and monopolistically competitive markets but my teacher didn't specify what the problem related to...

## Similar Questions

1. ### Managerial Economics

I need assistance with the following question: A researcher estimated that the price elasticity of demand for automobiles in the United States is -1.2, while the income elasticity of demand is 3.0. Next year, U.S. auto makers intend …
2. ### Managerial Economics--REALLY NEED HELP BY TOMORROW

Auto Maintenance Services (AMS) is a small auto service outlet in a suburban area of Syracuse. In reaction to a small increase in wages that has caused the marginal cost of this auto service establishment to increase from \$25 to \$30, …
3. ### economic systems

what are the three spin-off jobs that are directly related to the auto industry?
4. ### economics

I am writing a paper on how the monetary and fiscal policies have affected the auto industry i can not seem to find any web site to help me with this can any one give any suggestions Does available credit affect the auto industry?
5. ### Managerial Economics

Please help with this question: A researched estimated that the price elasticity of demand for automobiles in the U.S. is -1.2, while the income elasticity if demand is 3.0. Next year, U.S. auto makes intend to increase the avg price …
6. ### economics

Do loans- mortgages, auto, personal, etc.- make the economy more or less efficient and increase or decrease the GDP?
7. ### algebra

What was the combined sales revenue in march for the parts and service devision of Jacks auto service. April 11,000.00- parts 70,000.00- service March percent increase 10%-Parts 25%-service
8. ### MircroEconomics - Production & Cost

Please check my answers if they are correct! If not, please make corrections. Thank you! Bob, owner of Bobâ€™s Auto, sells cars. The number of car sales is represented by y. Bob buys autos at a price of A each and has no other costs. …
9. ### Economics

Please correct if I have stated the right correlation to the following relationships: a) volume of auto traffic and auto accident rate -> 0 correlation b) pesticide and crop yield -> negative correlation c) consumption and GDP …
10. ### Economics

n auto-service establishment has estimated its monthly cost function as follows: TC = 6000 + 10 Q where Q is the number of cars it services each months and TC represents its total cost. The firm is targeting 35,000 net monthly profit …

More Similar Questions

Post a New Question