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the own
a. 6.25
b. 25%
c. 10
d. 20
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- The Potomac Range Corporation 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, Potomacs 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 Potomacs oven and the competitive Spring City model? Would you say that these two firms are very dose 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 units it did before the Spring City price cut?(Categories of Price Elasticity of Demand) For each of the following absolute values of price elasticity of demand, indicate whether demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. In addition, determine what would happen to total revenue if a firm raised its price in each elasticity range identified. Absolut Value Elasticity Effect of Price Increase a b c dThe 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?
- Describe the general appearance of a demand or a supply curve with infinite elasticity.Consider the following demand and supply function of product ZT: Qd = 25 - 1.25 P Qs = -9 + 3 P Note: Determine the equilibrium point first to answer the following question. 9. What is the elasticity of demand at the original equilibrium point? Use a number, 2 decimal values, no commas, no space, no signs. * 10. How much is the change in the price for the producer, when additional sales tax is 0.85 per unit? Use a number, 2 decimal values, no commas, no space, no signs.A single producer company surveyed the elasticity data of its product X. The results indicated that: - X has an income elasticity of +0.8 - The cross-elasticity of X with Y is equal to -0.7 - The price elasticity of X is |0.8| Given these results, the company estimated that the forecast increase in consumer income is 5% next year, the expected increase in the price of Y is 10%. If the company intends to increase its sales by 3% in the following year, what is your recommendation for an adjustment in the price of X? (Hint: Consider the increase in income, then the effect of Y on X and then calculate the price adjustment to be made)
- When the price of oil was $95 per barrel, in thecountry of Wherever, 21,000 barrels of oil were produced per day. The elasticity of supply for oil producers in Wherever has been estimated to be 0.075. After a price change, Wherever's production increased to 21,750 barrels per day. Estimate the new price of oil.A 3.02 percent increase in the price of tea causes a 7.11 percent increase in the demand for coffee. The cross-price elasticity of demand for coffee with respect to the price of tea is: Select one: a. 0.30 b. 10.13 c. 21.47 d. 2.35Revenue at a major smartphone manufacturer was $1.4 billion for the nine months ending March 2, up 97 percent over revenues for the same period last year. Management attributes the increase in revenues to a 137 percent increase in shipments, despite a 17 percent drop in the average blended selling price of its line of phones.Given this information, is it surprising that the company’s revenue increased when it decreased the average selling price of its phones? a. Yes. Own price elasticity is −0.12, which means demand is inelastic and a decrease in price will decrease revenues. b. Yes. Own price elasticity is −8.06, which means demand is elastic and a decrease in price will decrease revenues. c. No. Own price elasticity is −8.06, which means demand is elastic and a decrease in price will raise revenues. d. No. Own price elasticity is −0.12, which means demand is elastic and a decrease in price will raise revenues.
- Using regression analysis on data from a field experiment, the demand curve for a product is estimated to be QXd = 1,200 − 3PX − 0.1PZ where Pz = $300. a. What is the own price elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below $140?Instruction: Enter your response rounded to two decimal places. Own price elasticity: Demand is: . If the firm prices below $140, revenue will: . b. What is the own price elasticity of demand when Px = $240? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above $240? Instruction: Enter your response rounded to one decimal place. Own price elasticity: Demand is: . If the firm prices above $240, revenue will: . c. What is the cross-price elasticity of demand between good X and good Z when Px = $140? Are goods X and Z…When the price of oil was $95 per barrel, in the country of Wherever, 21,000 barrels of oil were produced per day. The elasticity of supply for oil producers in Wherever has been estimated to be 0.075. After a price change, Wherever's production increased to 21,750 barrels per day. Estimate the new price of oil.
