b) Upscale hotels in the United States recently cut their prices by 20 percent in an effort to bolster dwindling occupancy rates among business travelers. A survey performed by a major research organization indicated that businesses are wary of current economic conditions and are now resorting to electronic media, such as the Internet and the telephone, to transact business. Assume a company’s budget permits it to spend $5,000 per month on either business travel or electronic media to transact business. Graphically illustrate how a 20 percent decline in the price of business travel would impact this company’s budget set if the price of business travel was initially $1,000 per trip and the price of electronic media was $500 per hour. Suppose that, after the price of business travel drops, the company issues a report indicating that its marginal rate of substitution between electronic media and business travel is 1. Is the company allocating resources efficiently? Explain

Question

24-07-2022
Business

contestada

b) Upscale hotels in the United States recently cut their prices by 20 percent in an effort to bolster dwindling occupancy rates among business travelers. A survey performed by a major research organization indicated that businesses are wary of current economic conditions and are now resorting to electronic media, such as the Internet and the telephone, to transact business. Assume a company’s budget permits it to spend $5,000 per month on either business travel or electronic media to transact business. Graphically illustrate how a 20 percent decline in the price of business travel would impact this company’s budget set if the price of business travel was initially $1,000 per trip and the price of electronic media was $500 per hour. Suppose that, after the price of business travel drops, the company issues a report indicating that its marginal rate of substitution between electronic media and business travel is 1. Is the company allocating resources efficiently? Explain

Respuesta :

Otras preguntas

You are charged with securing a site to build a wind farm. As you survey different potential sites, you look for the one that: a. is densely populated. b. has h

PLEASE HELP WILL GIVE TWENTY POINTS Which is the best approximation for the measure of angle ABC?

What does Mrs. Foster ask Lydia in chapter 41 of Pride and Prejudice?

Which statement best demonstrates why the following is a non-example of a polynomial? 33 over 16 âˆ’ 62y^2xz âˆ’ 35z^one-third y^2 The expression has a variabl

14. What was the name of the belief system that considered wealth to be a measure of "fitness"? A. Social Darwinism B. Moral Relativism C. Revivalism D.

every evening jenna empties her pockets and puts the changein a jar. at the end of the week she had 50 coins, all of them dimes and quarters. when she added the

_____ have a happy ending. Tragedies Comedies Dramas Festivals which onee??

The acceleration due to the earth's gravity, in si units, is 9.8 m/s2. in the absence of air friction, a ball is dropped from rest. its speed on striking the gr

Which of the following statements is true? A 6.75 < 6.759 < 6.751 < 6.85 B 5.55 < 5.559 < 5.65 < 5.69 C 4.11 < 4.12 < 4.17

Find the product (7lbs 12 oz) • 3

azikennamdi azikennamdi · Answer 1 · 2022-07-25T23:55:47+02:00

It is to be noted that the company is not allocating resources efficiently. See the attached image for the Graphically illustration required.

What is allocation of resources?

This is simply the ability to efficiently distribute resources across all aspects of production.

What is the proof that the company is misappropriating resources?

MRS is the gradient of the budget line is defined by the change in the Y axis divided by the change in the x axis.

In other words, MRS is the number of units of x that a customer is ready to give up in exchange for units of y.

Note that
the MRS fo the budget line is:

-dy/dx

= -10.6/6.25

= -1.6, that is media 1.6 units of media is given for every unit of business travel.

However, the corporation claims that the MRS is -1, which indicates that for every unit of business trip, they give away one unit of media. In other words, they are paying a price equal to the cost of business travel, resulting in a resource misappropriation.

Learn more about allocation of resources at;
https://brainly.com/question/5322091
#SPJ1