c. Explain why demand for Carmel cigarette tend to be more inelastic in the short run than in the long run. d. XYZ company specializes in supplying online sofa bed and wish to increase its total revenue. Based on the online data, XYZ company knows that its customers can be divided into two distinct markets: West coast Malaysia (WCM) and East coast Malaysia (ECM). The following table shows how the two regions respond to a 30% rebate: Volume of sales before West coast Malaysia East coast Malaysia the 30% rebate (sales per month) (sales per month) 500 300 Volume of sales after the 30% rebate 2000 400 į Using the midpoint method, calculate the price elasticities of demand for both regions. ii. If XYZ company wants to boost its sales and income, should the rebate be offered to Wes coast Malaysia or East coast Malaysia, or both regions, o neither regions? Justify your answer.
c. Explain why demand for Carmel cigarette tend to be more inelastic in the short run than in the long run. d. XYZ company specializes in supplying online sofa bed and wish to increase its total revenue. Based on the online data, XYZ company knows that its customers can be divided into two distinct markets: West coast Malaysia (WCM) and East coast Malaysia (ECM). The following table shows how the two regions respond to a 30% rebate: Volume of sales before West coast Malaysia East coast Malaysia the 30% rebate (sales per month) (sales per month) 500 300 Volume of sales after the 30% rebate 2000 400 į Using the midpoint method, calculate the price elasticities of demand for both regions. ii. If XYZ company wants to boost its sales and income, should the rebate be offered to Wes coast Malaysia or East coast Malaysia, or both regions, o neither regions? Justify your answer.
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:...
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Transcribed Image Text:c. Explain why demand for Carmel cigarette tend to be more inelastic in the short run than in
the long run.
d. XYZ company specializes in supplying online sofa bed and wish to increase its total
revenue. Based on the online data, XYZ company knows that its customers can be divided
into two distinct markets: West coast Malaysia (WCM) and East coast Malaysia (ECM). The
following table shows how the two regions respond to a 30% rebate:
Volume of sales before
West coast Malaysia
East coast Malaysia
the 30% rebate
(sales per month)
(sales per month)
500
300
Volume of sales after the
30% rebate
2000
400
į Using the midpoint method, calculate the price elasticities of demand for both regions.
ii. If XYZ company wants to boost its sales and income, should the rebate be offered to West
coast Malaysia or East coast Malaysia, or both regions, or neither regions? Justify your
answer.
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