Q = 100 – 2 P + 7 Py,“ || here Pr = £20, where P, = £20 is the price of another product- a) Calculate the demand for good X in this market at the current price level. How much revenue would the firm make? b) If the firm wishes to increase total revenue, would it need to increase or decrease the current price of good X? c) Calculate the cross-price point elasticity between goods X and Y at the current price level. Are the goods complements or substitutes?

Q = 100 – 2 P + 7 Py,“ || here Pr = £20, where P, = £20 is the price of another product- a) Calculate the demand for good X in this market at the current price level. How much revenue would the firm make? b) If the firm wishes to increase total revenue, would it need to increase or decrease the current price of good X? c) Calculate the cross-price point elasticity between goods X and Y at the current price level. Are the goods complements or substitutes?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter6: Elasticity

Section: Chapter Questions

Problem 11QP: Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price...

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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?
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?
For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect on the demand for hybrid gasoline-electric vehicles such as the Toyota Prius. Then do the same for each of the determinants of supply in Equation 2.2. In each instance, would equilibrium market price increase or decrease? Consider substitutes such as plug-in hybrids, the Nissan Leaf and Chevy Volt, and complements such as gasoline and lithium ion laptop computer batteries.
Suppose that the demand curve for a product is given by Qdx=100-2Px+aPy where Px = £20, where Py = £20 is the price of another product, and where a is 0. Calculate the demand for good X in this market at the current price level. How much revenue would the firm make? If the firm wishes to increase total revenue, would it need to increase or decrease the current price of good X? Calculate the cross-price point elasticity between goods X and Y at the current price level. Are the goods complements or substitutes?
Assume that the demand curve is a straight line. If the price per unit of a good rises from $2.40 to 3.00, it is expected that monthly demand will fall from 250,000 units to 200,000 units. What is the point price elasticity of demand when the price is $2.40? What is the arc price elasticity of demand over these ranges of price and output? Is the demand for this good price sensitive?
can u solve point d to g Suppose now that the unit price is currently p= 3. d. Find the current point elasticity of demand and determine whether demand is (perfectly) inelastic, (perfectly) elastic or has unit elasticity at the current price level. e. Suppose the current price increases slightly. Do you expect the revenue to increase or decrease? Explain. f. Suppose the price increases from p=3 to p=3.06. Estimate the (absolute) change in revenue. g. Now compute the exact change in revenue for a price increase from p=3 to p=3.06.
Suppose that the demand curve for a product is given by Qxd =100-2Px+7Py where = £20, where = £20 is the price of another product a).Calculate the demand for good X in this market at the current price level. How much revenue would the firm make? b).If the firm wishes to increase total revenue, would it need to increase or decrease the current price of good X? c).Calculate the cross-price point elasticity between goods X and Y at the current price level. Are the goods complements or substitutes?