: It is April and you have recently been hired as the manager of Really Annoying Bicycle Messenger Company in Washington, DC. You have been asked to improve profitability. (The company got its name from tweets from automobile drivers stuck in traffic.) You are discussing the pricing with two other managers, Shaun and Beatrice.1.Analysis of Pricing: You manage The Really Annoying Bicycle Messenger company which makes deliveries for lawyers, consultants, accountants, and lobbyists in most of Washington DC including Georgetown. The company makes deliveries of documents and small packages at a price of $10.00 each. The average number of deliveries in one month is 31,000. The owners of the Really Annoying Bicycle Co. would like to increase its sales and profits. They know that, if price is lowered, they will generate more deliveries. So they run an experiment. Price is lowered to $9.00 per delivery in May and the number of deliveries increases to 33,000.2.Shaun suggests that there wasn’t enough time in the experiment. He estimates that in the second month, June, the Really Annoying Company will have 36,000 deliveries at $9.00. Please answer the following assuming that Shaun is correct. You want to get an idea of what will happen to profits before you commit to an action. If profits go up assuming that the manager is correct, then you will keep the current price of $9.00 during June. If the profits go down, you plan to return to $10 per delivery. 3. The Really Annoying owners see the change in profits from the price decrease in May and the projection for June. They decide to go back to a price of $10.00 and have 31,000 deliveries in June. They decide that they are only willing to manage enough bicycle messengers to support 31,000 deliveries at a price of $10.00. However, if they raised price to $11.00 per meal, they would be willing to hire and manage enough messengers to make 45,000 deliveries. 3-a. Calculate the elasticity of Is it elastic or inelastic? .3-c What will be the revenue? 3-c ____________________________. 3-e Should Really Annoying Bicycle Messenger Company raise the price to $11.00? Why or why not? 3-e. Raise price, yes or no? _____________Why or why not? 4. What did you learn from this case? Post your response here on this answer sheet (below) and post your response to this question about what you learned to the Week 1 Discussion area. Do not post your replies to the first three question in the Discussion area, only your response to this final part. Choose one additional question (relating to different topic), either “Government Price Controls’ or “Free Trade” in the discussion area and answer it.
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