1 If the elasticity of demand for a product is -0.2, the demand curve is relatively ________ and an increase in price will _______ total revenue. Group of answer choices steep; increase flat; increase
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Economics
1 If the
Group of answer choices
steep; increase
flat; increase
2 If the elasticity of demand for a product is -2, the demand curve is relatively ________ and an increase in price will _______ total revenue.
Group of answer choices
steep; increase
flat; decrease
steep; decrease
flat; increase
flat; decrease
steep; decrease
Step by step
Solved in 2 steps
- 1. Use the Elasticity formula to calculate values of Elasticity for all the situations below. PRICE QUANTITY STEP 1 STEP 2 % CHANGE IN P STEP 3 PRICE ELACTICITY OF % CHANGE IN Od DEMAND Initial new Initial new 25 100 40 40 70 120 90 200 220 80 64 50 75 150 135 In each case, identify whether you would describe it as elastic / unit elastic / inelastic and why? 1. 2. 3. 4. 030Creative Homework/Short Project Assume that you arean entrepreneur who runs a bakery that sells glutenfree breads and cakes. You believe that the currenteconomic conditions merit an increase in the price ofyour baked goods. You are concerned. however, thatincreasing the price might not be profitable becauseyou are unsure of the price elasticity of demand for yourproducts. Develop a plan for the measurement of priceelasticity of demand for your products. What findingswould lead you to increase the price? What findingswould cause you to rethink the decision to increaseprices? Develop a presentation for your class outlining(I) the concept of elasticity of demand, (2) why raisingprices without undetstanding the elasticity would bea bad move. (3) your recommendations for measurement. and (4) the potential impact on profits for elasticand inelastic demand1. Alex finds that the demand for their lemonade is given by x = 2/p4 where p is price per cup and x is cups sold. (a) Find the elasticity of demand. (b) What is the elasticity of demand when p = 1? (c) Give an interpretation of the elasticity when p = 1. In particular, if you increase the price by 1%, what happens to the demand?
- 11.) In the market for cars, the price elasticity of supply is +1.5, and the price elasticity ofdemand is -0.8. The equilibrium price is $ 30 thousand, and quantity is 120 million.(a) Assuming supply and demand are linear, reconstruct and draw the supply and demandcurves. Label the intercepts.(b) To reduce traffic, the government imposes a $400 tax on cars. What are PB and PS after thetax? What is the new equilibrium quantity? Illustrate them on the same graph.(c) How big is the change in consumer surplus, producer surplus, government revenue, anddeadweight loss?Creative Homework/Short Project Assume that you arean entrepreneur who runs a bakery that sells glutenfree breads and cakes. You believe that the currenteconomic conditions merit an increase in the price ofyour baked goods. You are concerned, however, thatincreasing the price might not be profitable becauseyou are unsure of the price elasticity of demand for yourproducts. Develop a plan for the measurement of priceelasticity of demand for your products. What findingswould lead you to increase the price? What findingswould cause you to rethink the decision to increaseprices? Develop a presentation for your class outlining(1) the concept of elasticity of demand, (2) why raisingprices without understanding the elasticity would bea bad move, (3) your recommendations for measurement, and (4) the potential impact on profits for elasticand inelastic demandFind out if these products fall “most” under elastic or inelastic demand/supply. -Elasticity Demand of Green Tea. -Elasticity Supply of Green Tea -Elasticity Demand of Cereal -Elasticity Supply of Cereal -Elasticity Demand of Milk -Elasticity Supply of Milk
- 99257#/9999257/10/-1 Macmillan Learning $1.50 Stacked 3 4 --$1:50- Quantity 33.2 vered by desmas Quantity Alter the graph in order to explore the change in total revenue in response to a price change with different demand elasticities. Notice that once price goes below $1.50, total revenue decreases in both cases of demand elasticity. a. What important insights does this illustrate? Elasticity measures responsiveness in percent change, which is different than slope. Elasticity is unitary along a linear demand curve. Elasticity is constant along a linear demand curve. With linear demand curves, elasticity will eventually change as you move along a curve. b. What can be inferred about the elasticity of both curves once price goes below $1.50? O Demand is elastic for the steeper curve and inelastic for the flatter curve. O Demand is elastic for both curves once price drops below $1.50. There is not enough information to make a determination. O Demand is inelastic for both curves once…1. You want to earn extra money to take your family to Disney Land so you debate whether you should increase your price or not. If your business sells 800 units per month at $20/unit. And studies reveal that your product loses 5% of it customers with every $1 increase in price. If you increase your price to $23. *You must show all of your calculations and identify the type of elasticity for the product for full marks What is the coefficient for the elasticity of demand? _________ [2] Identify the type of elasticity. _________________ [1] What would you recommend to the owner in order to help achieve their goal? [2] ____________________________________________________________________Instructions Use this information to answer questions 17-30 17-30 30 The price elasticity of the gasoline demand is 0.35. The price elasticity of demand of rail transit during rush hour is 0.15 and during off peak hours is 1.2. The cross elasticity of demand of rail transit during rush hour with respect to the price of gasoline is 0.5 and the cross elasticity of demand of rail transit during off-peak hours with respect to the price of gasoline is 2. Moreover, the income elasticity of demand of rail transit during rush hour is 0.4 and the income elasticity of demand of rail transit during off peak hours is 0.7. Calculate the percent change in total revenue that would result from implementing the 10% fare raise during the gff-geak hours. Pay attention to the negative sign, it you enter your answer as a positive number, you are arguing that total revenue would increase otherwise, you are arguing that total revenue would decrease. NOTE: This is a numeric answer, no explanation is needed.…
- 1. The American Mining Company is interested in obtaining quick estimates of the supply and demand curves for coal. The firm's research department informs you that the elasticity of supply is approxi- mately 1.7, the elasticity of demand is approximately -0.85, and the current price and quantity are $41 and $1,206, respectively. Price is measured in dollars per ton, quantity is captured as number of tons per week. (a) Is demand elastic, inelastic or unit elastic? Explain (b) Write down the linear supply and demand curves at the current price and quantity. (c) Using Excel, provide a graph of the demand and supply curves. Is the market in equilibrium? (d) Calculate the Total Revenue, Average Revenue, and Marginal Revenue of the American Mining Company at the equilibrium price and quantity.(a) A manufacturer sells two products, A and B and had raised the prices of the two products recently to cover the higher production costs. The price and quantity for each product before and after the price change is given in the table below. Product Initial Price Initial Quantity Demanded New Price New Quantity Demanded A $250 280 $300 200 B $600 50 $750 45 Calculate the price elasticity of demand for both products using the midpoint method. Comment on their elasticities and explain two (2) possible reasons why they are different. What should the manufacturer do to the prices of the two products if the objective is to earn more revenue? (b) A monopolist has the demand and marginal cost as shown in the table below. There is no fixed cost in the production. Price Quantity Marginal Cost 10 1 2 9 2 3 8 3 4 7 4 5 6 5 6 (i) If the monopolist practices single pricing, determine the price, quantity, and profit of the monopolist. Explain how the quantity is…a. Define income elasticity of demand and cross-price elasticity of demand. b. If a firm determines that the income elasticity of demand for its good is negative (EY < 0), what can be said about this good? c. On the island of Econopia, the cross-price elasticity of demand between holilacs and bajwins is negative (EXY <0). What is the relationship between these goods?