Business

QUESTION 5: Kai decides to keep his price the same and add color, increasing variable costs by $0.40 per issue. What is the percent increase in unit volume (copies per issue) required to maintain $500 profits and cover the increased fixed and variable

One can calculate the change in sales volume necessary for the price change to be profitable by using the following Basic Breakeven

When elasticity of demand is measured more than one demand is classified as being elastic. At this rate the percentage change in price is less than the percentage change in quantity demanded. Therefore, E d = ∆Qd is greater/ ∆Pd is less. The coefficient in an elastic range is more than one. Elastic demand is unlike inelastic demand because it is greatly impacted by price changing. Even a small price increase can

1. When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is ( )

You are an economist advising Holden Australia about increasing their total revenue. How would knowledge of elasticity help you to make the correct decision?

Law of Demand: Downward slope, and inverse relation of price and quantity demand. When price of oranges goes up, the quantity demand will decrease, because of higher price, and substitutes.

MUx/Px equals 40/4= 10 < 15 = 30/2 = MUy/Py The consumer should decrease consumption of X. 4+2=6/2= 3 X is $1 less than an increase Y is $1 more than X works out to be

vi) Income elasticity in terms of normal goods, are goods which are consumed due to an increase in income. For example; when a change in income occur most individual tend to eat out at more expensive establishments, their taste in automobile seem to lean toward more luxury models and so on. This is considering positive, because the income increase is positive and so is the types of purchases.

15. Consumer’s income increased by 20% while price fell by 10% - all at the same time. As a

| (TCO A) There is a decrease in the cost of labor for producing bicycles.

2. The quantity of peanuts supplied increased from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to
$5 per ton. The price elasticity of supply for peanuts over this price range is

As income goes up the demand for farm products will increase by a smaller relative amount.

(b.) Now, suppose that following the supply and demand changes in (a), a substitute good goes down in price,

“Consider the demand for hamburgers. If the price of a substitute good (for example, hot dogs) increases and the price of a complement good (for example,

Since the value is less than one we can say that PS3s are elastic. This means that an increase in price of 1% will lead to a greater than 1% change in demand.