Ammongas has two types of customers: Farmers and utilities. The two groups have the following demand conditions: Farmers P = 5,000,000 - 140,000 * Q farmers Utilities P = 6,000,000 - 180,000 * Q utilities where Q is the number of plants sold and P is the price. Make a brief analysis of the demand of the two customer groups.

Ammongas has two types of customers: Farmers and utilities. The two groups have the following demand conditions: Farmers P = 5,000,000 - 140,000 * Q farmers Utilities P = 6,000,000 - 180,000 * Q utilities where Q is the number of plants sold and P is the price. Make a brief analysis of the demand of the two customer groups.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 10SQP

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?
Calculate the price elasticity of demand for mobiletelephones where the quantity sold decreases from 225 to180 when the price rises from BD50 to BD57.5 3) With the help of a diagram, analyse the impact of entry ofnew suppliers into an industry on the demand and supplycurves. Make sure that your diagram is labelled clearly.
The manager of the Beauty and Life company has hired him to do a market study according to income groups.a market study according to income groups. The study yielded the following consolidatedfollowing consolidated information: Price Units demanded (if monthlymonthly income is$2.000.000) Units demanded (if monthlymonthly income is$3.000.000) 25.000 10 20 30.000 8 17 35.000 4 12 40.000 1 8 Use the data to find the following technical information: 1.1. Calculate the price elasticity of demand for each of the incomes, if the price isincreases from $30,000 to $35,000. Interpret each result What type of good is it in each case?(use two decimal places for the results). 1.2. Calculate the price elasticity of demand for each of the incomes if the price is reduced from $40,000 to $35,000. 1.2. Calculate the price elasticity of demand for each income if the price is reduced from $40,000 to $35,000. Interpret each result What type of good is it in each case?(use two decimal…
Suppose John, the owner-manager of a local hotel, projects the following demand for his rooms: Price ($) Quantity Purchased (per Night) Total Revenue 90 100 110 90 130 70 (a)Calculate the price elasticity of demand between $90 and $110. (Use the midpoint formula) (b)Is the price elasticity of demand between $90 and $110 elastic, unit elastic, or inelastic? (c)Will John’s total revenue rise if he increases the price from $90 to $110?…
Assume that the following table represents the demand schedule for the product of your company: Price 0 10 20 30 40 50 60 70 80Quantity 160 140 120 100 80 60 40 20 0per day TotalRevenue (TR) Use your knowledge about the relationship between elasticity, prices and revenue how you would maximise the total revenue of a company that produces an inelastic good. Substantiate your answer with appropriate diagrams.
A department store has estimated the demand curve for a popular brand of women’s dress shoes as a function of price. Use the table to answer the question that follow. Points Price per pair Dress shoe sales per week A RO 18 100 B RO 15 200 C RO 12 300 D RO 9 400 E RO 6 500 F RO 3 600 Calculate demand elasticity between points A and B, between points C and D, and between points E and F. If the store currently charges a price of RO12, then increases the price to RO15, what happens to total revenue from shoe sales?
Your father owns a tourist site. He currently charges $5 per person who visits the site. Both Ghanaians and foreigners visit the site. The first demand curve is foreigners and the second is for Ghanaians. After your Econs 101 course you have realized that there may be a way to increase total revenue for your father. Using the demand curves below, answer the following questions. What is your father’s current total revenue for the 2 groups? The elasticity of demand is more elastic in which group or market? Which market has the more inelastic demand? 1 mark What is the elasticity of demand between the prices of $5 and $2 in the foreign market? Is this elastic or inelastic? What is the elasticity of demand between $5 and $3 in the Ghanaian market? Is this elastic or inelastic? Given the graphs and what you studied about economics, you recommend to your father to increase the price of foreigners to $8 each and lower the price of a Ghanaians to $3. How much could your father increase total…
Assume that the following table represents the demand schedule for the product of your company: Price 0 10 20 30 40 50 60 70 80Quantity 160 140 120 100 80 60 40 20 0per day TotalRevenue (TR) a. Complete the table by calculating the total revenue (TR) figures. b. At what price and quantity is revenue maximised? c. Use the data above to draw the relevant demand curve and the corresponding total revenue(TR) values.d. Use your knowledge about the relationship between elasticity, prices and revenue how you would maximise the total revenue of a company that produces an inelastic good. Substantiate your answer with appropriate diagrams.
Suppose a local supermarket runs a discount campaign on the sales of shampoos using discount coupons – any customer who shows a discount coupon will be offered an X% discount on the original retail price on Black Friday. Suppose the supermarket estimates that coupon users have a demand elasticity of -4 while non-coupon users will have a demand elasticity of -2.5. What should be the value for “X”? Explain with calculations. Be step-by-step. (Hint: Take the ratio between the prices for coupon and non-coupon users.)
Assume that you are in an interview session and the panel asks you to give a pricing decision that will maximize company’s interest (revenue maximization). Price Qd Qs 10 80 20 11 75 30 12 70 40 13 65 50 14 60 60 15 55 70 16 50 80 This is demand and supply schedule, estimate the equations, calculate the elasticity, and justify your positions based on your calculations. Based on your demand equation, what price will maximize the revenue and what would be the elasticity at the revenue maximization point.
Suppose you were shown a demand curve for bananas and were asked to calculate price elasticity of demand. After doing so, you come up with 1.67 (absolute value). A classmate was asked to derive price elasticity of demand on the identical demand curve and got 0. 75 (absolute value). A bit perplexed, your classmate asks the professor which answer is right? The professor checks both calculations and says, "They're both right." ls this possible? If so, how and why?
At a particular street corner are two competing sandwich shops: Tony’s and Diana’s. Both have been doing well selling delicious veggie sandwiches, so much so that they both increase their prices in response to rising demand. Use the data shown in the table below to calculate both Tony’s and Diana’s supply elasticity for veggie sandwiches. Which sandwich shop seems better situated to meet the rising demand for veggie sandwiches? QS1 Price1 QS2 Price2 Tony's 100 $5.00 125 $6.00 Diana's 65 $6.95 75 $8.50 Please answer both questions, as I am unsure of how to go about them