A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television
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Answer:
The correct answer is: a 10% increase in the price of cantaloupes will increase the quantity demanded of water melons by 11%.
Explanation:
The produce manager of a large grocery store is informed that the cross-price elasticity of demand between cantaloupes and water melons is 1.10.
The cross-price elasticity of demand is a measure to calculate the change in demand for a commodity due to a change in the price of another commodity.
It is calculated as a ratio of the percentage change in demand and percentage change in price.
A positive price elasticity implies that the two goods are substitutes. An increase in the price of one good leads to an increase in the demand for another.
The cross elasticity can be calculated as,
=
Let's assume that the price of cantaloupes increases by 10%.
Then,
1.10 =
ΔQy = 11
So we see that a 10% increase in the price of cantaloupes will cause the demand for water melons to increase by 11%.
- It is recommended to use one consultant with an average service time of 8 minutes/customer.
- The total cost for the first scenario where there is one consultant with an average service time of 8 minutes per customer is $ 29.05
- The total cost for the second scenario where there are two consultants with an average service time of 10 minutes per customer is $ 49.16
<u>Explanation</u>:
Given,
Average customer arrival = λ =2.3 customers/hour
Average consultant time1 = μ = 8 minutes/customer
Average consultant time2 = μ = 10 minutes/customer
Cost of consultants service = $18
Cost of customer waiting time = $25
Convert the average consultant time to hours/customer
Average consultant time1 = μ = 60/8 = 7.5 hours/customer
Average consultant time2 = μ = 60/10 = 6 hours/customer
- Single consultant queuing model:
Calculations for one consultant
Average no. of customers waiting for service = Lq = λ²/μ(μ-λ)
Average no. of customers waiting for service = Lq = (2.3)²/7.5(7.5 - 2.5)
Average no. of customers waiting for service = Lq = 0.1356
Average no. of customers in the system = L = Lq + λ/μ
Average no. of customers in the system = L = 0.1356 + 2.3/7.5
Average no. of customers in the system = L = 0.442
Total cost = (customer waiting time cost)*L + consultant service cost
Total cost = $ 25 0.442 + $ 18
Total cost = $ 29.05
- Multi consultant queuing model:
Calculations for two consultants
Average no. of customers waiting for service,
Lq = ((λ/μ)^k(λμ)/(k -1)(kμ - λ)) P₀
Where k = 2 is the number of consultants and P₀ is the probability that all of the k consultants are idle. The value of P₀ can be found in the tables with λ/μ = 2.3/6 = 0.38 and k = 2, P₀ ≅ 0.685
Average no. of customers waiting for service,
Lq = (2.3/6)²(2.3 6) / (2-1)(2
6 - 2.3)
0.685
Average no. of customers waiting for service = Lq = 0.1431
Average no. of customers in the system = L = Lq + λ/μ
Average no. of customers in the system = L = 0.1431 + 2.3/6
Average no. of customers in the system = L = 0.5264
Total cost = (customer waiting time cost)*L + consultant service cost
Total cost = $25 0.5264 + ($18)
2 (since there are 2 consultants now)
Total cost = $ 49.16