ECO550 - You are serving as the chair for your community's

ECCO550 Partial

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/Participants      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              ?

1000                                   $1,700       $83,000                $84,700              ?

  

2.  Given the above information on cost, if you charge $15 per entry, what is the breakeven quantity of bags that you should order?  At what quantity of bags will profits be maximized?

Please select any/all viable approaches below: 

Using Qb = F/(MR - AVC) where Qb is the break even quantity, the event would break even at 283 bags.

O   Using the profit-maximizing rule, MR ≥ MC, the quantity of bags that will maximize profits is 200 bags.

O   Using the profit-maximizing rule, MR > MC, the quantity of bags that will maximize profits is 300 bags.

O   The break even quantity cannot be determined in this case.

 

3.   Your Best Brand Bike Shorts - BBB Shorts have been flying off the shelf. Your chief economist tells you that during the Covid-19 pandemic, "the taste for bicycling has changed. The price elasticity of demand is much more inelastic. The price elasticity of demand has decreased from -5.76 to -2.70."

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] Show only your answer in the box. Do not include steps in the box and do not add the dollar sign.