Assignment 3 Coursework Example | Topics and Well Written Essays - 500 words

Assignment 3 - Coursework Example b. Bridget should first of all arrive at a figure as per her limited income as to the maximum amount she can spend on food. Next, she must determine the various amounts of utility derived from wine and cheese at various levels of consumption units. This will give requisite information as to the levels of consumption for both wine and cheese, where the marginal utility per dollar spent for both will be equal. This will give the combination of utility maximizing quantities. Applied problem 1.As per the given problem (Thomas & Maurice, 2011, pp. 204-232), USA today does not agree with the analyst that a raise in unit price of the paper from 50 to 75 cents will bring in an additional $65 million revenue. In this case, the analyst is assuming that the demand for paper is relatively inelastic and increasing price will not cause the sales of copies to drop. However, the USA today itself, citing the example of Wall street Journal, rejects this observation. It does so based on the observation that the sales of wall street journal dropped sharply after an increase in the price per unit. In doing so, the paper assumes that Price elasticity of demand for the paper is the same as that of Wall street journal. In doing so, it implicitly assumes that the demand for the paper is highly price elastic. Applied problem 1.As per the given problem (Thomas & Maurice, 2011, pp. 243-276) , the Wilpen company, is a price setting firm, which estimates its U.S. demand for Tennis balls using the following linear equation: Where, Q is the number of cans of Tennis Balls sold quarterly, P is the wholesale price of a can of tennis balls, M is the consumers’ average household income and Pr is the average price of tennis Rackets. Based on the given information, a. The Parameter a, which is the Y intercept for the regression line for the function. As per the computer output given, the value of