Q38/ 3&4 38. Elasticity of Demand for Digital Cameras The quantity demandedeach week x (in units of a hundred) of the Mikado digital camera is related tothe unit price p (in dollars) by the demand equationV400 - 5P(o sps 80)X =1. Is the demand elastic or inelastic when p40? When pб0?%D2. When is the demand unitary?Hint: Solve E(p) = 1 for p.3. If the unit price is lowered slightly from $60, will the revenueincrease or decrease?4. If the unit price is increased slightly from $40, will the revenueincrease or decrease?

Answer part(1)- we have given…

38. Elasticity of Demand for Digital Cameras The quantity demanded each week x (in units of a hundred) of the Mikado digital camera is related to the unit price p (in dollars) by the demand equation x = V400 - 5p (o sp s 80) 1. Is the demand elastic or inelastic when p = 40? When p = 60? 2. When is the demand unitary?

38. Elasticity of Demand for Digital Cameras The quantity demanded each week x (in units of a hundred) of the Mikado digital camera is related to the unit price p (in dollars) by the demand equation x = V400 - 5p (o sp s 80) 1. Is the demand elastic or inelastic when p = 40? When p = 60? 2. When is the demand unitary?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 3.6P: (Price Elasticity of Supply) Calculate the price elasticity of supply for each of the following...

See similar textbooks

Similar questions

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?
From 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.
What is the formula for line cross-price elasticity of demand?
The price elasticity of demand for personal computers is estimated to be 2.2. If the price of personal computers declines by 20 percent, what will be the expected percentage increase in the quantity of computers sold?
From the data in Table 5.6 about supply of alarm clocks, calculate the price elasticity of supply from: point J to point K, point L to point M, and point N to point P. Classify the elasticity at each point as elastic, inelastic, or unit elastic.
(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.
Describe the general appearance of a demand or a supply tune with zero elasticity.
If supply is elastic, will shifts in demand have a larger effect on equilibrium quantity or on price?
Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose from $95 to $105, what would be the elasticity of supply if the quantity supplied changed from a. 38 to 42? b. 78 to 82? c. 54 to 66?
What is the formula for the income elasticity of demand?