A local firm produces three types of Pizza, for delivery to homes in the area. The owner has completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: (Quantities are per week).  PricePizza A (Qd)Pizza B (Qd)Pizza C (Qd)12800010011840020010880400300992080040089601200500710001600600610402000700510802400800 Plot the three demand curves, on one graph. (It does not have to be Excel). Calculate PED for all three pizzas over the price range $9 to $10.  Use the midpoint formula (see your class lecture notes.) Explain why the three PED measures are different.  What change would make all three PED measures become more elastic?  What about more inelastic?

Question
Asked Feb 13, 2020
23 views

A local firm produces three types of Pizza, for delivery to homes in the area. The owner has completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: (Quantities are per week). 

 

Price

Pizza A (Qd)

Pizza B (Qd)

Pizza C (Qd)

12

800

0

100

11

840

0

200

10

880

400

300

9

920

800

400

8

960

1200

500

7

1000

1600

600

6

1040

2000

700

5

1080

2400

800

 

Plot the three demand curves, on one graph. (It does not have to be Excel).

 

  1. Calculate PED for all three pizzas over the price range $9 to $10.  Use the midpoint formula (see your class lecture notes.)

 

  1. Explain why the three PED measures are different.  What change would make all three PED measures become more elastic?  What about more inelastic?



check_circle

Expert Answer

star
star
star
star
star
1 Rating
Step 1

Price elasticity of demand refers to the degree of responsiveness of demand for a commodity, after a change in its price. The percentage method, mid-point method, and the arc method are the three important measures of price elasticity of demand. 

Step 2

The demand curves for all the three pizzas can graphically be explained as follows.

 

Economics homework question answer, step 2, image 1

Figure 1 represents the demsnd curves of pizza A, B and C. In this figure, price is measured on the vertical axis and the quantity demand is measured on the horizontl axis. The demand curve for pizza A is more steeper and the demand curve foe pizza 'B' is more flatter. 

Step 3

The price elasticity of demand for all the three pizza's over the price ranges of $9 to $10 can be calculated by using the mid-point method as follows.

Economics homework question answer, step 3, image 1

The calculated value shows that the price elasticity of demand for pizza A over the price ranges of ...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Economics

Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: com/courses/26116/discussion_topics/176523?module_item_id%3D1255293 LTaJtiCTty arna Topic According ...

A: Given Information- The last 100 pairs of the original good are supplied at the current price equal t...

question_answer

Q: #16. Joanna is deciding between consuming Good X and Good Y. At her current level of consumption, he...

A: Joanna is deciding between consuming good X and good Y. At her current level of consumption, her mar...

question_answer

Q: Suppose a firm has the following cost: Output (units): 10 11 12 13 14 15 16 17 18 19 Total cost:    ...

A: a.The total cost of the firm is given and the marginal cost can be calculated by subtracting the TC2...

question_answer

Q: What are the effects on the equilibrium price and quantity of steel if the wages of steelworkers ris...

A: It is given that there is an increase in the wages of steelworkers and an increase in the price of a...

question_answer

Q: Which are the countries that did not sign the UNCLOS Treaty and why?

A: The UNCLOS defines the rights and the responsibilities of nations with respect to their use of the w...

question_answer

Q: Eurostat reports the following information about the Irish economy for the years 2009 - 2015.   All ...

A: Click to see the answer

question_answer

Q: In deciding to produce a given good, an individual would always choose A. The process that uses the ...

A: To determine the production method that a producer must always choose.

question_answer

Q: n Lima one worker can produce either 32 bushels of corn of 10 pounds of tomatoes in one day.  In Pum...

A: In Lima, worker can produce 32 bushels of corn or 10 pounds of tomatoes. So, the opportunity cost of...

question_answer

Q: What is the difference between macroeconomics and microeconomics?

A: Microeconomics analyses the actions of individual humans, companies, organizations or markets. Macro...