Look at the demand curves in the figures below. 4 4 3 a 2 2 D1 d 1 1 D2 10 20 30 40 10 20 30 40 50 Quantity Quantity Instructions: Round your answers to two decimal places. Enter positive values for elasticities (absolute values). a. Use the midpoint formula and points referenced to calculate the elasticity of demand for that range of the demand curve. Elasticity of demand for D1 (points a to bin the left figure) Elasticity of demand for D2 (points c to din the right figure) 3. Price 50 LO Price

Look at the demand curves in the figures below. 4 4 3 a 2 2 D1 d 1 1 D2 10 20 30 40 10 20 30 40 50 Quantity Quantity Instructions: Round your answers to two decimal places. Enter positive values for elasticities (absolute values). a. Use the midpoint formula and points referenced to calculate the elasticity of demand for that range of the demand curve. Elasticity of demand for D1 (points a to bin the left figure) Elasticity of demand for D2 (points c to din the right figure) 3. Price 50 LO Price

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 8SQ: The president of Tucker Motors says, Lowering the price wont sell a single additional Tucker car....

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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?
Plot the price and quantity data given in the demand schedule of exercise 1. Put price on the vertical axis and quantity on the horizontal axis. Indicate the price elasticity value at each quantity demanded. Explain why the elasticity value gets smaller as you move down the demand curve.
The president of Tucker Motors says, Lowering the price wont sell a single additional Tucker car. The president believes that the price elasticity of demand is a. perfectly elastic. b. perfectly inelastic. c. unitary elastic. d. elastic.
If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is evidence that demand is a. price elastic. b. price inelastic. c. unit elastic with respect to price. d. perfectly inelastic.
Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.
What does a price elasticity of demand of 0.39 mean?
Prove that price elasticity of demand is not the same as the slope of a demand curve.