Economics Assignment

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* MicroManagerial Economics * Assignment No. 1 * Due Date: october 22,2015 * * 1. The American Bagel Co. is considering opening a Bagel bakery and coffee shop near Campus. In an effort to predict the profitability of this venture, their in-house consulting team estimated that the daily demand for Bagels in the area to be the following * Q = -5P + 20Pp - 30Pc +5I * Where P = the price of bagels, Pp = the price of pastries (each), Pc = the price of coffee (per cup), and I = Income (average annual per capita, for local residents in thousands of dollars) * a. Comment on this estimated demand function. Are the parameters reasonable? Why or why not? (Restrict your commentary to the signs of the parameters) * Reasonable Sign? (Y/N) Reason * P _________________________________________________ * Pp _________________________________________________ * Pc _________________________________________________ * I __________________________________________________ * b. Suppose that the price of pastries = $1, coffee costs $.50 per cup, and average per capita income in the fan area is $12,000. Calculate the inverse demand curve (e.g., express price as a function of quantity).
Demand: __________________________________
Inverse demand _________________________________ * c. What happens to the predicted…...

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