4.1. The owner of a local hot dog stand has estimated that if he lowers the price of hot dogs from RM2.00 to RM1.50, he will increase sales from 400 to 500 hot dogs per day. Using the midpoint formula, the demand for hot dogs is . A) elastic. B) inelastic. C) unit elastic. D) perfectly elastic. 4.2. At a price of RM20, a store can sell 24 picture frames a day. At a price of RM18 the store can sell 33 picture frames a day. Since total revenue decrease, demand must be by the price A) is increased; elastic B) is increased; inelastic C) is increased; unit elastic D) is decreased; elastic

4.1. The owner of a local hot dog stand has estimated that if he lowers the price of hot dogs from RM2.00 to RM1.50, he will increase sales from 400 to 500 hot dogs per day. Using the midpoint formula, the demand for hot dogs is . A) elastic. B) inelastic. C) unit elastic. D) perfectly elastic. 4.2. At a price of RM20, a store can sell 24 picture frames a day. At a price of RM18 the store can sell 33 picture frames a day. Since total revenue decrease, demand must be by the price A) is increased; elastic B) is increased; inelastic C) is increased; unit elastic D) is decreased; elastic

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 8SQ: The president of Tucker Motors says, Lowering the price wont sell a single additional Tucker car....

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(Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of demand measures, for a given price, the __________ in quantity demanded divided by the __________ income from which it resulted. b. If a decrease in the price of one good causes a decrease in demand for another good, the two goods are __________. c. If the value of the cross-price elasticity of demand between two goods is approximately zero, they are considered __________.
The president of Tucker Motors says, Lowering the price wont sell a single additional Tucker car. The president believes that the price elasticity of demand is a. perfectly elastic. b. perfectly inelastic. c. unitary elastic. d. elastic.
Suppose a movie theater raises the price of popcorn 10 percent, but customers do not buy any less popcorn. What does this tell you about the price elasticity of demand? What will happen to total revenue as a result of the price increase?
Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.
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?