The following graph displays four demand curves (LL, MM, NN, and 00) that intersect at point A. 200 180 180 M 140 E 120 100 80 60 M 40 20 20 40 60 80 100 120 140 180 180 200 QUANTITY (Units) PRICE (Dollars per unit) B.

The following graph displays four demand curves (LL, MM, NN, and 00) that intersect at point A. 200 180 180 M 140 E 120 100 80 60 M 40 20 20 40 60 80 100 120 140 180 180 200 QUANTITY (Units) PRICE (Dollars per unit) B.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 18SQ

See similar textbooks

Similar questions

After running a promotional campaign, the owners of a local hardware store decided to decrease the prices for the advertised products sold in their store. One can infer that a. the promotional expenditures made the demand for the advertised products more elastic. b. the promotional expenditures made the demand for the advertised products less elastic. c. the promotional expenditures had no effect on the demand elasticity. d. the owners got it wrong. To cover the promotional expenses, they should have raised the prices.
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?
Spreadsheet exercises. Suppose that the market for video games is competitive with demand function Qd = 130 − 4p + 2Y + 3pm − 2pc, where Qd is the quantity demanded, p is the market price, Y is the monthly budget that anaverage consumer has available for entertainment, pm is the average price of a movie, and pc is the price of a controller that is required to play these games. Given that Y = $100, pm = $30, and pc = $30, use Excel to calculate quantity demanded for p = $10 to p = $80 in $5 increments. Use Excel’s charting tool to draw the demand curve. Let Y = $100, pm = $30, and pc increase to $40. Recalculate the demand schedule in part 1 and use Excel to draw the new demand curve.
supposed an airline announces that its earnings this year are lower than expected due to reduced ticket sales. the airline spokesperson gives no information on how the company plans to turn things around. use the graph illustration of demand and supply shown below and label the graph accordingly:
The following table displays data about demand for smart phones. Points P Q A 6060 3,0003,000 B 7070 2,8002,800 C 8080 2,6002,600 D 9090 2,4002,400 E 100100 2,2002,200 F 110110 2,0002,000 G 120120 1,8001,800 H 130130 1,6001,600 Step 1 of 2 : Using the midpoint method, calculate the price elasticity of demand from Point F to Point G. If necessary, round all intermediate calculations and your final answer to two decimal places.
Viking InterWorks is one of many manufacturers that supplies memory products to original equipment manufacturers (OEMs) of desktop systems. The CEO recently read van article in a trade publication that reported the projected demand for desktop systems to be Qddesktop = 1,600 −2Pdesktop + .6M (in millions of units), where Pdesktop is the price of a desktop system and M is consumer income. The same article reported that the incomes of the desktop systems’ primary consumer demographic would increase 4.2 percent this year to $61,300 and that the selling price of a desktop would decrease to $980, both of which the CEO viewed favorably for Viking. In a related article, the CEO read that the upcoming year’s projected demand for 512 MB desktop memory modules is Qdmemory = 11,200 − 100Pmemory − 2Pdesktop (in thousands of units), where Pmemory is the market price for a 512 MB memory module and Pdesktop is the selling price of a desktop system. The…
You are presented with the following data from The Home Depot (THD) on sales of its Snowminator Snow Shovel during the winters of 2012-2015, throughout Canada. The product’s price (P), measured in Canadian Dollars, is: 26, 22, 18, 14, 10, 6, and 2. The corresponding quantity demanded (Qd) in the Northern part of the nation, measured in millions of shovels, was: 3, 6, 9, 12, 15, 18, and 21. While the corresponding quantity demanded, measured in millions of shovels, in the Southern part of the nation was: 4, 6, 8, 10, 12, 14, and 16. Assume all the data was retrieved internally from The Home Depot. In two separate graphs that you have created using Excel, clearly and accurately graph the demand and total revenue curves for the Northern part of Canada. These will be graph # 1 and # 2, respectively. In a separate graph from part A above, clearly and accurately graph the demand curve for the Southern part of Canada. This will be graph # 3. Solely consider your graphs and data in…
The inverse demand curve corresponding to the following equation is: Qd= 100 - 3P The inverse equation is?
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, Decayfighter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopdecay’s sales declined by 1,500 units per month.a. What is the arc cross elasticity of demand between Stopdecay’s toothbrush and Decayfighter’s toothbrush? What does this indicate about the relationship between the two products?b. 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.c. What is Stopdecay’s average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)?d. Is the result in part (c) necessarily desirable? What other factors would have to…
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over their past year. Recently, its closest competitor, Decayfighter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopdecay’s sales declined by 1,500 units per month. a) What is the arc cross elasticity of demand between Stopdecay’s toothbrush and Decayfighter’s toothbrush? What does this indicate about the relationship between the two products?
All questions utilize the multivariate demand function for Smooth Sailing sailboats in C6 on text page 83, initially with: PX = $9500 PY = $10000 I = $15000 A = $170000 W = 160 This function is: Qs = 89830 -40PS +20PX +15PY +2I +.001A +10W Where Qs=quantity purchased Ps= the price of Smooth Sailing sailboats Px= the price of company X’s sailboat Py= the price of company’s Y’s motorboat I= per capita income in dollars A= dollars spent on advertising W=number of favorable days of weather in the southern region of the United States Use the above to calculate the arc price elasticity of demand between PS = $5000 and PS = $4000. The arc elasticity formula is: Calculate the quantity demanded at each of the above prices and revenue that will result if the quantity is sold (fill in table below). PS QS Revenue…
Other Companies (Part 2) You directed your research department to do some research on the demand for Tesla sedans. They selected BMW i3 Sedans and Chevy Bolts as comparative offerings. Using regression analysis, the research department comes up the following estimate for yearly demand. Qx = -40,000 -1*Px +0.02*M +2*PB +2*PC Where: Px = $70,000, M = $150,000, PB = $65,000, PC = $40,000 a. Is the own price elasticity of demand for Tesla sedans at the point defined above elastic or inelastic? If Mr. Musk decides to raise his prices, what will happen to his revenue. b. PB and PC represent the price for i3 sedans and Bolt sedans respectively. Are these items compliments or substitutes when compared to Teslas? Give evidence to support your answer. c. Is the demand for Tesla sedans elastic or inelastic to price changes of BMW i3 and Bolt at the price points given in the problem? Interpret the result you find and explain what it means.