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Consider the following supply schedule for apartments in a local market.

Consider the following supply schedule for apartments in a local market. a. Draw the supply curve...

a. Draw the supply curve for apartments. Be sure to label the axes.

b. Suppose the going rental price for apartments is $550 per month. How many apartments will be supplied? (Assume the supply curve is a straight line between the points in the table above.)

c. Indicate the area of market producer surplus in your graph. Also indicate the area that represents the total cost of supplying apartments.

d. Next, assume that a particular landlord is willing to supply an apartment only if the rental price is at least $450 per month. What is her producer surplus in this market?

e. Use graph to support your answer. f. Suppose that the price for condominiums in the area increases. This creates an incentive for apartment owners to convert their rented apartments to condominiums (which are sold to buyers, rather than rented), thus removing them from the rental market. What would you expect to happen to producer surplus in the apartment market as a result of this change? Draw a graph to support your answer

 
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Monifa plans to spend her income on concert tickets and movie tickets. Suppose that she has an income of $100. The price of a concert ticket is $20, and the price of a movie ticket is $10.

a. Draw, and carefully label, a budget line diagram illustrating the consumption combinations that she can afford.

b. Can she afford 6 movie tickets and 1 concert ticket? Label this point on your graph.

c. Can she afford 2 movie tickets and 6 concert tickets? Label this point on your graph.

d. Can she afford 4 movie tickets and 3 concert tickets? Label this point on your graph.

e. Which of the combinations mentioned just uses up all her income?

 
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In which of the following situations does a market leader position make sense?

Group of answer choices

when the supply of a particular skill exceeds the demand for that skills

when an organization is competing for specialized skills in a tight labour market

when an organization’s main objective is to control costs

when an organization is looking to pay employees comparable rates to the relative marketplace

when an organization has strong variable compensation programs

22.

Which of the following is a common type of injury that may be reduced through the application of ergonomic principles?

Group of answer choices

decreases in hand function

hearing problems

repetitive strain injuries

vision loss

upper back injury

23.

Which of the following is the process by which a new employee begins to understand and accept the values, norms, and beliefs held by others in an organization?

Group of answer choices

socialization

orientation programs

adaptation

familiarization

participation

 
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Exercise 2: Blockbuster!

It’s 1994, and you are one of the brand managers for Blockbuster Video (remember those?). You are interested in whether a 3-year marketing campaign centered on extended weekend rentals for “Preferred” clients would be profitable. Based on field tests in select markets, giving Preferred membership customers a weekly coupon for the latest blockbusters seems to increase the number rentals over the weekends if the key titles are adequately stocked.

  • The average Preferred customer rents 2 old titles at $1.99 and 1 blockbuster title for $4.99 each week. The data suggest that customers will rent TWO additional blockbuster movies over the weekend when given a $2.00 discount per weekend blockbuster title. Thus, each customer rents on average 2 old titles (at $1.99), 1 blockbuster title during the week (at $4.99), and at least 2 discounted blockbuster titles (at $2.99) over the weekend.
  • Each store on average hosts an average of 3,000 Preferred customers from the surrounding area. Further, these customers are very loyal and retention based on yearly rental records is about 95%. Acquisition cost associated with the Preferred membership is approximately $100 per customer.
  • The discount rate for the industry is about 17%. The company’s average gross margin is 34%.
  • Costs associated with the Preferred membership customer appreciation program include:
    • fixed marketing expenses (weekly direct mailings, local newspaper inserts targeting those with Preferred membership cards, emails, and communication) are about $3,500 per week; and
    • fixed marketing cost to continually train employees (high turnover) that is about $200 per week.

Please submit the following:

  • Identify and list all assumptions necessary and create the CLV model in Excel.
  • Answer and explain: Is this a good venture? Why or why not?

 
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