10 (Note: Point A is the midpoint of the demand curve) 8 Demand 2 3456 Pounds of cheese at At Point A the elasticity of demand is-1 Figure 13.3 1) Refer to Figure 13.3. The marginal revenue of the fourth pound of cheese is 2) Refer to Figure 13.3. The marginal revenue of the sixth pound of cheese is 3) Refer to Figure 13.3. This firm's total revenue will be maximized at a price of 4) Refer to Figure 13.3. This firm's marginal revenue will be positive at 5) Refer to Figure 13.3. This firm's marginal revenue will be negative at Price per unit 007654

10 (Note: Point A is the midpoint of the demand curve) 8 Demand 2 3456 Pounds of cheese at At Point A the elasticity of demand is-1 Figure 13.3 1) Refer to Figure 13.3. The marginal revenue of the fourth pound of cheese is 2) Refer to Figure 13.3. The marginal revenue of the sixth pound of cheese is 3) Refer to Figure 13.3. This firm's total revenue will be maximized at a price of 4) Refer to Figure 13.3. This firm's marginal revenue will be positive at 5) Refer to Figure 13.3. This firm's marginal revenue will be negative at Price per unit 007654

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 3P

See similar textbooks

Similar questions

Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while transatlantic air travel in economy class has an estimated price elasticity of 0.12. Why do you think this is the case?
The New York Times reported (Feb. 17, 1996) that subway ridership declined after a fare increase: There were nearly four million fewer riders in December 1995, the first full month after the price of a token increased 25 cents to 1.50, than in the previous December, a 4.3 percent decline. a. Use these data to estimate the price elasticity of demand for subway rides. b. According to your estimate, what happens to the Transit Authoritys revenue when the fare rises? c. Why might your estimate of the elasticity be unreliable?
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
Can you think of an industry (or product) with near infinite elasticity of supply in the short term? That is, what is an industry that could increase Qs almost without limit in response to an increase in the price?
The supply of paintings by Leonardo Da Vinci, who painted the Mona Lisa and The Last Supper and died in 1519, is highly inelastic. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that demand for these paintings will determine the price.
(8) a.) (4) The United States Postal Service (USPS) charged $0.58 per stamp in 2022. They allow stamps.com to sell a sheet of twenty stamps with personalized photos for $1.20 per stamp. Stamps.com keeps the extra beyond the $0.58 it pays the USPS. If stamps.com is acting as a profit maximizing monopolist, what is their Lerner Index and what is the price elasticity of demand for a customized stamp? b.) (4) Suppose a movie theater determines that the elasticity of demand for movie tickets is -2.0 for senior citizens and –1.5 for adults under age 65, and the marginal cost is $4 per consumer. Use the Lerner index to determine the price senior citizens should be charged and the price adults under age 65 should be charged in order to maximize profits.
As a producer, how would you use the information about elasticity to maximize your revenue? Explain. give graph if needed
using the graph expalin why elasticity of demand will be greater bewteen 15 and $9 opposed tombewtween $9 and $4. prove this is true
Germany is a major world supplier of cars. A recent earthquake severely damaged the production facilities of German car companies, sharply reducing the amount of chips they could produce. a. Assume that the total revenue of a typical non-German car manufacturer rises due to these events. In terms of an elasticity, what must be true for this to happen? Illustrate the change in total revenue with a diagram, indicating the price effect and the quantity effect of the German earthquake on this company’s total revenue.b. Now assume that the total revenue of a typical non-German car manufacturer falls due to these events. In terms of an elasticity, what must be true for this to happen? Illustrate the change in total revenue with a diagram, indicating the price effect and the quantity effect of the German earthquake on this company’s total revenue.
2. The Ice Cream Lovers Society decided to open up an ice cream stand during the summermonths. They calculated that it would cost them $0.80 to make a scoop of ice cream and$350 a month to operate the stand. They hired a research team who determined that theprice-demand function given in dollars isp x x ( ) = −8 0.02wherexis the number ofscoops sold.a. Find the revenue functionR x( )b. Find the value ofxthat produces the maximum revenue algebraically.c. Find the maximum revenue algebraically.d. Find the price per scoop of ice cream that produces the maximum revenuealgebraically.e. Find the cost functionC x( )that describes the monthly costs of operating the icecream stand.f. Find the break-even points to the nearest scoop algebraically usingR x( )andC x( ) .g. Find the profit functionP x( ).
Taiwan is a major world supplier of semiconductor chips. A recent earthquake severely damagedthe production facilities of Taiwanese chip-producing companies, sharply reducing the amount of chipsthey could produce.a. Assume that the total revenue of a typical non-Taiwanese chip manufacturer rises due to theseevents. In terms of an elasticity, what must be true for this to happen? Illustrate the change in totalrevenue with a diagram, indicating the price effect and the quantity effect of the Taiwan earthquake onthis company’s total revenue.b. Now assume that the total revenue of a typical non-Taiwanese chip manufacturer falls due to theseevents. In terms of an elasticity, what must be true for this to happen? Illustrate the change in totalrevenue with a diagram, indicating the price effect and the quantity effect of the Taiwan earthquake onthis company’s total revenue.
a) Suppose a movie theater determines that the elasticity of demand for movie tickets is -2.0 for senior citizens and –1.5 for adults under age 65, and the marginal cost is $2 per consumer. Use the Lerner index to determine how much senior citizens should be charged and how much adults under age 65 should be charged. b) A different movie theater, which faces the same marginal costs, charges consumers $6 for matinee movies and $10 for evening movies. Use the Lerner Index to calculate the price elasticity of demand for matinee consumers and evening consumers.