
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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At $5 per cup, customers will buy 8 cups of coffee per week. At a price of $3, consumers are willing to buy 12 cups per week. The elasticity of the market
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- The demand for a product is q=29p7 items when each item costs p dollars. What is the price elasticity of demand?arrow_forwardKristian likes to eat sausages. When his income rose last year by 15%, his consumption of sausages fell by 10%. Therefore, the income elasticity of demand isarrow_forwardA recent report by the Centers for Disease Control looked at the relationship between the price of beer and the incidence of new cases of STD's. The report concluded that a beer tax increase of $.20 could reduce overall STD rates by 8.9%. Assume that a six pack cost $5.90 before the price increase. Calculate the cross price elasticity between beer and STD's. What is the sign of this cross-price elasticity? According to your estimate, are beer and STD's compliments or substitutes? Does your answer make sense? Explain.arrow_forward
- Suppose that the demand for sweatshirts at the university bookstore is given by: P = 40 – 0.2Q A) Using the point elasticity method, price elasticity of demand at a price of $8 is B) Is the demand for sweatshirts elastic or inelastic at the price of $8?arrow_forwardThe cross-price elasticity between the good sold in this market (call it X) and another good (Y) is εXY = –0.80. The cross-price elasticity between the good X and good Z, on the other hand, is εXZ = 1.50. Are X and Y substitutes, complements, or unrelated? How about X and Z? Explain.arrow_forwardSuppose the demand curve for a good is P = 10 - 2Q. Drawing the demand line and by calculating the point elasticity of demand, explain for which region of prices the demand will be a) Elastic b) Unit elastic c) Inelasticarrow_forward
- Suppose income increases by 25 percent and, as a result, the quantity of a particular brand of automobile demanded (holding the price for this particular automobile constant) increases by 39 percent. The income elasticity of demand for this brand of car is (Enter your response rounded to two decimal places and include a minus sign if appropriate.)arrow_forwardUsing the midpoint method, your price elasticity of demand as the price of pizzas increases from $14 to $16 is____ if your income is $20,000 and___ if your income is $24,000. If the price of a pizza is $12, your income elasticity of demand is_____ as your income increases from $20,000 to $24,000. However, if the price of a pizza is $16, your income elasticity is______ .arrow_forwardIt is known that the demand function for two goods, namely x and y, is shown by the equation Qx = 25 - Px + 0.5Py Px = $3 Py = $5 a. Determine the elasticity of goods x b. Determine the cross elasticity of the two goodsarrow_forward
- The price of apples go up by 20%, causing the quantity demanded of peaches to go up by 15%. Which one of the following is true? a) Apples and peaches are complementary goods. b) The own-price elasticity of apples is 0.75. c) The cross-price of apples with respect to peaches is negative. d) The cross-price elasticity of peaches with respect to apples is positive.arrow_forwardAssume the market demand for tuna cans may be written as Qtc = 45 - 2 x Ptc + Psc+ 0.3y (where Ptc = price of tuna cans and Psc = price of sardine cans, and y = income). Further assume that both tuna cans and sardine cans sell for $1 and income is $25. Calculate cross - price elasticity for tuna cans and identify whether the goods are substitutes or complements.arrow_forwardSuppose the income elasticity of demand for food is 0.45 and the price elasticity of demand is - 1.00. Suppose also that Felicia spends $10,000 a year on food, the price of food is $2, and that her income is $25,000. If a sales tax on food caused the price of food to increase to $2.50, what would happen to her consumption of food? Because a large price change is involved, use the arc elasticity to measure the price elasticity of demand rather than a point elasticity. Felicia's consumption of food would decrease by 1000.00 units. (Enter your response rounded to two decimal places.) Suppose that Felicia gets a tax rebate of $2,500 to ease the effect of the sales tax. What would her consumption of food be now? (Again, use an arc income elasticity to answer this question instead of a point income elasticity.) Felicia's consumption of food would now be 4,175.18 units. (Enter your response rounded to two decimal places.) Is she better or worse off when given a rebate equal to the sales tax…arrow_forward
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