Problem #4Note: Unexplained answers will NOT be gradedAn economist han estimated the demand expation of a certain product as Q-000-SP where is the price unit and Qs the quantity demanded (info) per your1.Calculate the own price elasticity of demand of the product when its price goes from $30 to $33 per unit2. Give an interpectation of the value of the own price elasticity calculatedquestion 1.3. Using the demand equation Q-200-SP, calculate the own price elasticity when price is P-$10 Is demand elastic, unit elastic o incat a price P-5107 Will you tameincrease revenue?price m4. Using the demand equation Q-200-SP, determine the commernplas (CS) when price is P-$10 What's the total expenditure (TE) when price is P-$107 Deseme de tal comsalue (TCV) when price is P-$10.For the toolbar, press ALT+F 10 (PC) or ALTF NF 10 (Mac)BIVSHEA10ptParagraphIX QSEOpen Sans V890"20xx,FE88 201

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Problem 4 Note: Unexplained answers will NOT be graded An han estated the demand eption of a certain product a Q-200-SP whese P the pen and Q the y dded (in thond) pes you LCalculate the price elasticity of demand of the product when pegs from $10 2. Give an interpectation of the value of the own price elasticity calculated on t 3. Using the demand equation Q-200-SP, calculate the own pesce elemicity when price in P-410. Is demand clate, un chico inclicat peace P-4107 Wall you c 4. Using the demand equation Q-200-SP, determine the comme napln (CS) when price is P-510 What's the total expenditus (TE) when pesce P-5107 Des de comm salue (TCV) when price is P-510 MIEHETNINE 10 Med

Problem 4 Note: Unexplained answers will NOT be graded An han estated the demand eption of a certain product a Q-200-SP whese P the pen and Q the y dded (in thond) pes you LCalculate the price elasticity of demand of the product when pegs from $10 2. Give an interpectation of the value of the own price elasticity calculated on t 3. Using the demand equation Q-200-SP, calculate the own pesce elemicity when price in P-410. Is demand clate, un chico inclicat peace P-4107 Wall you c 4. Using the demand equation Q-200-SP, determine the comme napln (CS) when price is P-510 What's the total expenditus (TE) when pesce P-5107 Des de comm salue (TCV) when price is P-510 MIEHETNINE 10 Med

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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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?
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(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?
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