For the first time in two years, Big G (the cereal division ofGeneral Mills) raised cereal prices by 4 percent. If, as a result ofthis price increase, the volume of all cereal sold by Big G changedby -5 percent, what can you infer about the own price elasticity ofdemand for Big G cereal?It i v (Click to select)unit elasticCabraer revenues on sales of its Lucky Charmscreased?elasticinelasticYes - it decreased.Yes - it increased.O No - you can't tell. For the first time in two years, Big G (the cereal division ofGeneral Mills) raised cereal prices by 4 percent. If, as a result ofthis price increase, the volume of all cereal sold by Big G changedby -5 percent, what can you infer about the own price elasticity ofdemand for Big G cereal?It is (Click to select) ♥Can you predict whether revenues on sales of its Lucky Charmsbrand increased or decreased?O Yes - it decreased.Yes - it increased.No - you can't tell.

In the above question, it is given that the first time in two years, the company raised cereal…

For the first time in two years, Big G (the cereal division of General Mills) raised cereal prices by 4 percent. If, as a result of this price increase, the volume of all cereal sold by Big G changed by -5 percent, what can you infer about the own price elasticity of demand for Big G cereal? It is (Click to select) ♥ Can you predict whether revenues on sales of its Lucky Charms brand increased or decreased? Yes - it decreased. Yes - it increased. No - you can't tell.

For the first time in two years, Big G (the cereal division of General Mills) raised cereal prices by 4 percent. If, as a result of this price increase, the volume of all cereal sold by Big G changed by -5 percent, what can you infer about the own price elasticity of demand for Big G cereal? It is (Click to select) ♥ Can you predict whether revenues on sales of its Lucky Charms brand increased or decreased? Yes - it decreased. Yes - it increased. No - you can't tell.

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 2PA

See similar textbooks

Similar questions

Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose from $95 to $105, what would be the elasticity of supply if the quantity supplied changed from a. 38 to 42? b. 78 to 82? c. 54 to 66?
Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the price of oranges falls by 3. What will happen to the demand for apples?
Explain why using the midpoint formula for calculating the elasticity of demand gives the same result whether price increases or decreases, but using the initial price and quantity instead of the average does not.
What is the price elasticity of demand? Can you explain it in your own words?
If supply is elastic, will shifts in demand have a larger effect on equilibrium quantity or on price?
Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price for wheat and a price 2 higher per bushel. Do you think that farmers collectively would try to reduce the supply of wheat and drive the price up 2 higher per bushel? Explain your answer. Assuming that they would try to reduce supply, what problems might they have in actually doing so?
Suppose you are in change of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your companys product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.
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?
What is the price elasticity of supply? Can you explain it in your own words?
What is the formula for line cross-price elasticity of demand?
The price elasticity of demand for personal computers is estimated to be 2.2. If the price of personal computers declines by 20 percent, what will be the expected percentage increase in the quantity of computers sold?