9. Elasticity and total revenue The following graph shows the demand curve for kumquats. Points A, B, C, and D mark price ranges over which you will be asked to calculate the p elasticity of demand for this good. Use the purple rectangle labeled Total Revenue (diamond symbols) to compute total revenue at various prices along the demand curve. To see the area of the Total Revenue rectangle, select the shaded area with your mouse. You will not be graded on where you place the rectangle. 10 Total Revenue B 5 1 2 3 4 QUANTITY (Thousands of bushels) 01 7 10 Calculate the price elasticity of demand between points A and B and points C and D using the midpoint method, and fill in the Price Elasticity of Demand column in the following table. Then for each price range, identify whether demand is elastic, inelastic, or unit elastic. Price Range Price Elasticity of Demand Elastic, Inelastic, Unit Elastic Change in Total Revenue between Points A and B C and D In the previous table, for each price range, indicate whether total revenue increases, decreases, or does not change. PRICE (Dollars per bushel per month)

9. Elasticity and total revenue The following graph shows the demand curve for kumquats. Points A, B, C, and D mark price ranges over which you will be asked to calculate the p elasticity of demand for this good. Use the purple rectangle labeled Total Revenue (diamond symbols) to compute total revenue at various prices along the demand curve. To see the area of the Total Revenue rectangle, select the shaded area with your mouse. You will not be graded on where you place the rectangle. 10 Total Revenue B 5 1 2 3 4 QUANTITY (Thousands of bushels) 01 7 10 Calculate the price elasticity of demand between points A and B and points C and D using the midpoint method, and fill in the Price Elasticity of Demand column in the following table. Then for each price range, identify whether demand is elastic, inelastic, or unit elastic. Price Range Price Elasticity of Demand Elastic, Inelastic, Unit Elastic Change in Total Revenue between Points A and B C and D In the previous table, for each price range, indicate whether total revenue increases, decreases, or does not change. PRICE (Dollars per bushel per month)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 8PA: The New York Times reported (Feb. 17, 1996) that subway ridership declined after a fare increase:...

See similar textbooks

Similar questions

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.
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.
The price elasticity of the demand for gasoline is -0.02. The price elasticity of demand for gasoline at Joe’s 66 station is -1.2. Explain what might account for the different elasticities.
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.
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?
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?
Describe the general appearance of a demand or a supply curve with infinite elasticity.
According to the previous discussion, what factors influence the price elasticity of demand for cigarettes? What other factors not mentioned in the article might influence the price elasticity of demand for cigarettes?