ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Textbook Question
Chapter 5, Problem 1.2P
(Price Elasticity and Total Revenue) Fill in the blanks for each price-quantity combination listed in the following table. Now graph this relationship, making sure to label each axis. What relationship have you depicted?
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1. When the price of butter increases from $1 to $2, the quantity demand of margarine
increases from 6 to 8. What is the cross-price elasticity of demand?
A) (6-8)/8
(1-2)/2
(8-6)/6
(2-1)/₁
(1-2)/2
(8-6)/
B)
D) (2-1)/₁
(6-8)/8
1 Price Elasticity of Demand and Price Elasticity of Supply
The table shows the price and quantity demanded for backpacks. Using the Midpoint Method, what is the price elasticity of
demand between points Cand D?
Note: Remember to take the absolute value of the result and round to the nearest hundredth. If using a calculator, rounding
should be done at the end of your calculation.
Point
Price
Quantity
$15
8,000
$16
7,500
$17
7, 000
D
$18
6,500
E
$19
6,000
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Question
Suppose that business travelers and vacationers have the following demand for airline tickets from Karachi to Dubai:
Price
Quantity Demanded
(Business Travelers)
Quantity Demanded
(vacationers)
$150
2100 Tickets
1000 Tickets
$200
2000
800
$250
$300
1900
1800
600
400
As the price of tickets rises from $150 to $200, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the midpoint method in your calculations.)
Chapter 5 Solutions
ECON MICRO
Ch. 5 - (Calculating Price Elasticity of Demand) Suppose...Ch. 5 - (Price Elasticity and Total Revenue) Fill in the...Ch. 5 - (Categories of Price Elasticity of Demand) For...Ch. 5 - Prob. 2.4PCh. 5 - (Determinants of Price Elasticity) Would the price...Ch. 5 - (Price Elasticity of Supply) Calculate the price...Ch. 5 - (Cross-Price Elasticity) Rank the following in...Ch. 5 - Prob. 4.8PCh. 5 - (Other Elasticity Measures) Complete each of the...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- What is the formula for line cross-price elasticity of demand?arrow_forwardDefine the price elasticity of demand. Explain the relationship between total revenue and the price elasticity of demand.arrow_forwardFrom the data in Table 5.5 about demand for smart phones, calculate the price elasticity of demand from: point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.arrow_forward
- Suppose you could buy shoes one at a time, miter than in pain. What do you predict the cross-price elasticity for left shoes and right shoes would be?arrow_forward(Price Elasticity of Supply) Calculate the price elasticity of supply for each of the following combinations of price and quantity supplied. In each case, determine whether supply is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. a. Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 400 units. b. Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 500 units. c. Price falls from $2.25 to $1.75; quantity supplied remains at 600 units. d. Price increases from $1.75 to $2.25, quantity supplied increases from 466.67 units to 600 units.arrow_forwardSuppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000) Quantity Demanded (income = 12,000) 8 40 DVDs 50 DVDs 10 32 45 12 24 30 14 16 20 16 8 12 a. Use the midpoint method to calculate your price elasticity of demand as the price of DVDs increases from 8 to 10 if (i) your income is 10,000 and (ii) your income is 12,000. b. Calculate your income elasticity of demand as your income increases from 10,000 to 12,000 if (i) the price is 12 and (ii) the price is 16.arrow_forward
- What is the price elasticity of demand? Can you explain it in your own words?arrow_forwardQuestion 4The Pear company sells a smart phone for $250. Its sales have averaged 8,000 units per month over the last year. Recently, its closest competitor Banana company reduced the price of its smart phone from $350 to $300. As a result, Pear’s sales declined by 1,500 units per month. (a) What is the cross price elasticity of demand between the Pear and Banana smart phone? Use the averaging formula. What does this indicate about the relationship between the two products? (b) If the Pear company knows that the price elasticity of demand for its phone is -1.5, what price would the Pear company have to charge to sell the same number of units as it did before the Banana company price cut? Assume that Banana company holds its price of its phone constant at $300. Use the averaging formula.arrow_forward
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