A wheat manufacturing company is practicing price discrimination in two cities, na Bangalore and Kolkata. The price and the price elasticities of demand in the two market given below: Bangalore Kolkata Price: 42 Price: 25 |Ep| = 2 |Ep| = 4 %3D la. Are the prices charged in the two markets optimal? (Answer in YES/NO only). Word li

A wheat manufacturing company is practicing price discrimination in two cities, na Bangalore and Kolkata. The price and the price elasticities of demand in the two market given below: Bangalore Kolkata Price: 42 Price: 25 |Ep| = 2 |Ep| = 4 %3D la. Are the prices charged in the two markets optimal? (Answer in YES/NO only). Word li

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 23SQ: If automobiles and gasoline are complements, then their cross-elasticity coefficient is a. strictly...

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If automobiles and gasoline are complements, then their cross-elasticity coefficient is a. strictly greater than 1. b. positive. c. equal to zero. d. negative.
Your friend is a talented artist. She has no other employment options, she finds painting effortless, and the cost of materials is low enough that it can be safely ignored. Based on your analysis of market data, you estimate that elasticity of demand for her paintings is given in the displayed table. If your friend wants to maximize her income, what price do you advise her to charge for her paintings? Include a brief explanation. (If you think you can only determine a price range, as opposed to a precise price, give a price range.)
If the price of an airline ticket from DSM to ACY were to increase by 20%, from $250 to $300 roundtrip, while all other demand factors remain at their initial values, the quantity of rooms demanded at the Lakes from rooms per night to rooms per night. Because the cross-price elasticity of demand is , hotel rooms at the Lakes and airline trips between DSM and ACY are
Taj Hotels, Infosys) Can you think of an example from the firm chosen that reflects the application of price elasticity in revenue decisions? Justify
Energy markets, such as the market for natural gas and electricity, have been known to be characterized by inelastic demand. However, recent research discussed in the August 25, 2022 issue of The Economist, indicates that while the responsiveness of quantity demanded in response to price changes indeed is “inelastic” (i.e., the absolute value of price elasticity of demand is still less than 1), the percentage change in quantity demanded in response to a change in price is much larger than earlier research indicated. Answer these narrative questions. No graphs are needed. What does “inelastic demand” formally mean? In addressing this part of the question, please make sure to explain the concept of the price elasticity of demand using a simple formula and by providing a short narrative. Policymakers are encouraging people to conserve energy in response to the growing energy crisis. Discuss the positives (pros) and negatives (cons) of providing subsidies to consumers in this situation…
Suppose that Jawa Timur Park offers a discount on admission to residents of Batu. What kind of price discrimination is this? What does this imply about the elasticity of demand for Jawa Timur Park attractions by Batu?
Each year a new group of high school seniors chooses where they want to attend college. The college faces two identifiably different categories of customers, in-state and out-of-state students. The (inverse) demand equation for in-state students is given by PI=$9000- QI, while demand by out-of-state students is given by PO= $21,000 -9QO. P represents the annual tuition charged by the college and Q represents the number of students who enter as freshmen. The marginal cost of educating an additional student is constant and equal to $3000. Suppose that the Board of Trustees wants to act as a profit-maximizing monopolist in setting price and output. What tuition should they charge for in-state and out-of-state students, and how many of each would enroll each year?
Miron Floren, of Lawrence Welk Show fame, now tours the country performing at accordion concerts. A careful analysis of demand for tickets to Mr. Floren’s concerts reveals a strange segmentation in the market. Demand for tickets by senior citizens is described by Qo = 500P^–3/2 , while demand by those under 65 years old is Qy = 50P^–4. If the marginal cost of a ticket is £3, how should tickets to Mr. Floren’s concerts be priced to maximize profits? A. £3 for senior citizens and £8 for those younger B. £6 for senior citizens and £12 for those younger C. £9 for senior citizens and £4 for those younger D. £4.71 for all tickets E. £12 for senior citizens and £4.50 for those younger
To engage in first-degree price discrimination, a firm must Multiple Choice be able to set P > MC, know each consumer's maximum willingness to pay, and prevent low-value consumers from reselling to high-value consumers. prevent low-value consumers from reselling to high-value consumers. be able to set P > MC. know each consumer's maximum willingness to pay.
Suppose that Starbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup,and as a result, the quantity sold per day increased from 350 to 450. Over this price range, theprice elasticity of demand for Starbucks coffee is: Group of answer choices 0.40. 2.50. 0.80. 1.25.
What is price discrimination? Explain how the theories of elasticity, if used, can help suppliers make decisions on product prices.
Blossom, Inc., sells 900 bottles of perfume a month when the price is $10. A huge increase in resource costs forces Blossom to raise the price to $12, and the firm only manages to sell 750 bottles of perfume. Using the midpoint formula, the price elasticity of demand coefficient is Multiple Choice 1 and elastic. 1.4 and elastic. 1 and unit elastic. 1.67 and elastic.