Explain the following question by logical answers(a)Explain why the cross elasticity of demand for substitute goods is positive and the crosselasticity of demand for complements is negative.(b)Explain why the price elasticity of demand changes along a linear demand curve.(c)Why the demand curve is perfectly elastic in perfect competition?(d)Law of diminishing marginal utility is especially applicable in agriculture sector. Comment

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ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.3P: (Categories of Price Elasticity of Demand) For each of the following absolute values of price...

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Question 1 The Potomac Range Corp manufactures a line of microwave ovens costing $500 each. Its sales have averaged about 6,000 units per month during the past year. In August, Potomac's closest competitor, Spring City Stove Works, cut its price for a closely competitive model from $600 to $450. Potomac noticed that its sales volume declined to 4,500 units per month after Spring City announced its price cut. What is the arc cross elasticity of demand between Potomac's oven and the competitive Spring City model? Would you say that these two firms are very close competitors? What other factors could have influenced the observed relationship? If Potomac knows that the arc price elasticity of demand for its ovens is -3.0, what price would Potomac have to charge to sell the same number of unit it did before the Spring City price cut?
Please no written by hand and no image The Potomac Range Corporation manufactures a line of microwave ovens costing $600 each. Its sales have averaged about 8,000 units per month during the past year. In August, Potomac’s closest competitor, Spring City Stove Works, cut its price for a closely competitive model from $800 to $550. Potomac noticed that its sales volume declined to 5,500 units per month after Spring City announced its price cut. (A.) What is the arc cross elasticity of demand between Potomac’s oven and the competitive Spring City model? (B) Would you say that these two firms are very close competitors? What other factors could have influenced the observed relationship? (C) If Potomac knows that the arc price elasticity of demand for its ovens is –3.0, what price would Potomac have to charge to sell the same number of units it did before the Spring City price cut?
A topic on optimal pricing, elasticity, stay-even analysis, or cost-based pricing.
Explain the term price elasticity of demand? How is it measured? What factors influence market demand for products? If the price elasticity is -3 and RM 100 is the marginal cost of product X, what should be the optimal sale price? (Hint: apply the mark-up rule) (600-700 words)
QUESTION 3 Explain the term price elasticity of demand?How is it measured? If the price elasticity is -3 and RM 200 is the marginal cost of product X,what should be the optimal sale price? (Hint:apply the mark -up rule)
QUESTION 1: Assume Tea brands ChotooChai and BaraChai are competing brands in the market. With arrival of winter season, ChotooChai announces good promotional deals. Using ‘Comparative Statics Analysis’ of demand and supply model: How will the managements of the two brands study the short-run and long-run impact on Tea Sales, after the announcement of promotions in the market of Tea? Demonstrate and explain, with clearly labelled two panel diagrams, the ‘Rationing Function’ and the Allocating or ‘Guiding Function’ of Price. QUESTION 2: Demand for Orange Juice is given as Qd = 5000 – 2500 P + 1200 I + 650 E – 255 Ps Suppose Income is I = Rs.500, Expectations E = 55, and Price of Ps = Rs 25. Find the Demand Equation. Using the demand function from part a., Calculate Elasticity of Demand for price range of Rs.125 and Rs.155. What will be the ‘Price Elasticity of Demand’ at P = Rs.125? Interpret the Elasticity of Demand calculated in (C) above.
(a) Express quantity as a function of price for both retail and wholesale customers. Add these quantities together to calculate the market demand curve. Graph the retail, wholesale and total market inverse demand curves. (b) Calculate total revenue (TR), total cost (TC) and total profit (π) based on total market inverse demand. (c) Calculate the profit-maximizing price-output combination and total profit. Calculate the break- even points.
which Statement is TRUE a) If value of cross price elasticity is positive then it means there are less close substitutes are available of that product. b) In case of luxury products, the own price elasticity of demand is greater than one. c) If salaries of journalist go up then demand curve of newspaper will shift upward. d) When price elasticity of supply is greater than one it means supply curve is flatter.
Dr/Sr means Short run of Supply and Demand, DL/Sl means Long run of Supply and Demand. Equilibrium is 140, 1500The longer curly bracket is long run, the shorter one is short run.In the short run, the price elasticity of demand is equal to what via midpoint method? (-.63,.38, or -.33) In the long run, the price elasticity of demand is equal to what via midpoint method? (.83,-.33, or -.63)
Demand for personal computers (PCs) can be characterized as point elasticity as follows: Price elasticity = -5, cross-price elasticity with software = -4, and income elasticity = 2.5. Whether the statements written in points a, b, c, and d below are true or false, and are accompanied by a description / explanation / calculation that supports your opinion. A. Decreasing PC prices will increase the demand for PCs and will also increase total revenue.B. The value of cross-price elasticity above indicates that a 5% decrease in PC price will lead to a 20% increase in software demand.C. Demand for PC is price elastic and PC is normal good.D. A decrease in software prices will increase the income received by PC sellers and software sellers.
Globalization’s fast pace around the world has helped people to adopt new trends and fashion at a higher rate as compared to the era with low level of FDI and trade. In Pakistan the growing concentration for Coffee cafes has opened new horizons for the investors to endow. If TYJ using the annual sales data of Gloria Jeans’ estimated the demand function for their upcoming venture in coffee market, answer the following:QC=10,000-20PCa) Derive the demand curve and explain the relationship between demand and price.b) If TYJ wishes to sell 5,000 cups of coffee a day, find the price for selling the same.c) Suppose if the price is determined at 350 identify the quantity TYJ would be able to sell.d) Suppose Espresso increases its price for per cup of coffee, illustrate and explain the impact it might create on the demand of coffee provided by TYJ. e) Calculating the risk, help TYJ identify at what price the demand for coffee would fall to zero. Also, explain in your opinion the demand of…
Our class lecture covered Printers and Ink Cartridges which are Complements. We will now look at substitutes. GM produces Chevys (c) and Buicks (b). The cars are considered substitutes by consumers. Demands are Qc=100-.5Pc-.1Qb and Qb=40-.4Pb-.2Qc. The price functions are Pc=200-2Qc-.2Qb and Pb=100-2.5Qb-.5Qc. Total Revenue is TR=Pc*Qc+Pb*Qb. Total Cost is TC=2Qc+1Qb. Find the profit-maximizing price for Chevys, taking into consideration Chevys and Buicks are substitutes. The profit maximizing price of Chevys is ____.

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