ECO 550 Strayer University Economics Essay

Description

Please answer all questions 1-9 and include work

****The document is also attached****

Question 1

You are serving as the chair for your community’s annual wellness campaign. A key event is the annual Walk 3k, Run 10k, Ride 20k event. The event is staged entirely by volunteers and the goal is to attract community-wide awareness of getting active as a key step to wellness. In other words, the goal is not to raise money, but to prompt awareness. As the chair, you set a financial goal to break even on the one and only cost of the event, a fitness bag with the community seal and the event motto, I AM ON THE RIGHT TRACK!

The cost of the bags, which must be ordered in batches of 100, are:

Bags	Fixed Cost	Variable Cost	Total Cost	Marginal Cost
0	$1,700	$ –	$1,700
100	$1,700	$500	$2,200
200	$1,700	$1,200	$2,900
300	$1,700	$2,700	$4,400
400	$1,700	$5,200	$6,900
500	$1,700	$9,000	$10,700
600	$1,700	$15,000	$16,700
700	$1,700	$23,800	$25,500
800	$1,700	$36,800	$38,500
900	$1,700	$55,800	$57,500
1,000	$1,700	$83,000	$84,700

Question 2

Bags	Fixed Cost	Variable Cost	Total Cost
0	$1,700	$ –	$1,700
100	$1,700	$500	$2,200
200	$1,700	$1,200	$2,900
300	$1,700	$2,700	$4,400
400	$1,700	$5,200	$6,900
500	$1,700	$9,000	$10,700
600	$1,700	$15,000	$16,700
700	$1,700	$23,800	$25,500
800	$1,700	$36,800	$38,500
900	$1,700	$55,800	$57,500
1,000	$1,700	$83,000	$84,700

Given the above information on cost, if you charge $15 per entry, what is the breakeven quantity of bags that you should order? Orders must be placed in blocks of 100 bags.

Please select any/all viable approaches below:

		Use the profit maximizing rule, MR = MC, buy 300 bags.
		Use the profit maximizing rule, MR = MC, buy 200 bags.
		Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 300.
		Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 200.

Question 3

Your marketing department just undertook a major advertising campaign promoting the quality of your Best Brand Bike ShortsBBB Shorts.

They have provided you with an estimate of the success of the campaign stating: the price elasticity of demand has decreased from-5.76 to -3.76.

Before the campaign, your price was $240 per pair of BBB Shorts. What should the new price be?

Please enter the new price here: $

[a]

Question 4

Seven years ago, you started a crosstown delivery service. The service is an environmentally friendly business and, given all the traffic congestion, you are also the fastest service in the city since your entire crew are bicyclists. You have two types of service. You have a small parcel service for anything that is flat and measures less than 11×17. You have a package service using a 100 lb. capacity bike trailer for anything weighing up to 10 lbs. As a way to introduce the new package service when you implemented the small package service, you charged the same price for packages as parcels. You are now wondering if you should charge different prices for the parcel and package service.

Complete the table below for the combined market of parcels and packages.

Price	Parcels and Packages	TR	MR	TC	MC	MR-MC	Profit
	50	5,000		1,600			3,400
90		10,800	83	2,300	10	73	8,500
80	190	15,200	63	3,000	10	53
	260	18,200	43	3,700	10	33	14,500
60		19,800	23	4,400	10	13	15,400
50	400	20,000	3	5,100	10	-7
	470	18,800	-17	5,800	10	-27	13,000
30		16,200	-37	6,500	10	-47	9,700
20	610	12,200	-57	7,200	10	-67
10	680	6,800	-77	7,900	10	-87	-1,100

Question 5

Complete the table below for the parcels market.

Price	Parcels	TR	MR	TC	MC	MR-MC	Profit
100	0	0		1,150
90		4,500	90	1,650	10	80	2,850
	100	8,000	70	2,150	10	60	5,850
70	150	10,500	50	2,650	10	40	7,850
60	200	12,000	30	3,150	10	20
50		12,500	10	3,650	10	0	8850
	300	12,000	-10	4,150	10	-20	7850
30	350	10,500	-30	4,650	10	-40
20		8,000	-50	5,150	10	-60	2850
	450	4,500	-70	5,650	10	-80	-1,150

Question 6

Complete the table below for the packages market.

Price	Packages	TR	MR	TC	MC	MR-MC	Profit
100	50	5,000		450			4,550
	70	6,300	65	650	10	55	5,650
80		7,200	45	850	10	35	6,350
70	110	7,700	25	1,050	10	15
	130	7,800	5	1,250	10	-5	6,550
50		7,500	-15	1,450	10	-25	6,050
40	170	6,800	-35	1,650	10	-45
	190	5,700	-55	1,850	10	-65	3,850
20		4,200	-75	2,050	10	-85
10	230	2,300	-95	2,250	10	-105	50

Question 7

Should the delivery service charge one price or will segmentation increase profits? Support your conclusion by calculating the profit from each strategy provided in Questions 4, 5, & 6.

Question 8

You help couples book their perfect honeymoon. You currently offer plans for a cruise and for a casino stay.

Your sales manager is getting her MBA and has suggested you might consider bundling as a way to boost profits.

The table below shows the customer preferences. Your costs are $100 for the first booking and $50 for each additional booking.

“We Book Your Honeymoon Tour”

	Cruise	Casino
Customer 1	$7,000	$3,000
Customer 2	$2,000	$6,000

Given the preferences, would bundling improve profits over the high-cost strategy? Support your conclusion by showing if (by how) profits differ under each strategy.

Question 9

Follow up question (note that the dollar amounts have not changed from the previous scenario.)

You help couples book their perfect honeymoon. You currently offer plans for a cruise and for a casino stay.

Your sales manager is getting her MBA and has suggested you might consider bundling as a way to boost profits.

The table below shows the customer preferences. Your costs are $100 for the first booking and $50 for each additional booking.

“We Book Your Honeymoon Tour”

	Cruise	Casino
Customer 1	$7,000	$3,000
Customer 2	$2,000	$6,000

You know that about 21% of your customers decline cruises because of seasickness. At least 12% decline the casino trip saying they don’t believe in gambling. As a rough approximation, you estimate that approximately 33% of your customers will never bundle. Given the preferences distribution, will mixed bundling increase profits? You must show the calculations that support your conclusion.