the price of tea (Pr). The demand function is given by: Qc = 266 – 7Pc + 0.5Pr The price of coffee is Pc=10, and the price of tea is Pr=8. a) Calculate the price elasticity of the demand for coffee and the cross-price elasticity b) Are the two goods complements or substitutes?
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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?Consider the market for a new DVD movie, where the price is initially $8 and 44 copies are sold per day at a superstore, as indicated in the figure to the right. The superstore is considering lowering the price to $4. ] What is the price elasticity of demand between these two prices (use the Midpoint Formula)? The price elasticity of demand is nothing. (Enter your response as a real number rounded to two decimal places.)State the cross price elasticity (of demand). Suppose the price of a good (X) is RM5, now the price of that good (X) increases by 5%. As a consequence, the demand of another good (Y) decreases by 10%. What is the cross-price elasticity for the good Y. Is the good (Y) is a substitute good or a complementary good to the first one?
- Your research into the spice market shows that when the price of spices increases by 5%, the quantity demanded of spices decreases by 5% and the quantity demanded of vegetables decreases by 16%. Based on this information, what is the cross-price elasticity of demand for vegetables? Enter a number only. Remember, for some elasticities, we take the absolute value. For others, we do not. Include a negative sign if needed.a) Suppose the price of flour increases from $0.60 to $1.10 a pound and the quantity demanded decreases from 100 pounds to 60 pounds. Using the midpoint method, what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic? b) A 15 percent increase in income brings about a 25 percent decrease in the demand for a good. What is the income elasticity of demand and is the good a normal good or an inferior good?Assume that in Country A, the average annual income of a typical person is $180,000. Annual consumption of black caviar is estimated at 5 kilos. The income elasticity of demand for black caviar is 1.25. What would average annual income have to be for consumption of black caviar to rise to 7.5 kilos? Use the midpoint method in your calculations.
- Consider a market where the price of elasticity of the demand for streaming services is -0.6, the price elasticity of demand for movie tickets sold during the evenings is -0.8, and for matinee shows is -1.75. Suppose also that the cross elasticity of demand for movie tickets sold during the evenings with respect to the price of streaming services is 0.2, the cross elasticity of demand for matinee movie tickets with respect to the price of streaming services is 0.1, and the cross elasticity of demand for matinee shows with respect of the price of evening shows is 1. Moreover, the income elasticity of demand for movie tickets sold during the evenings is 0.7, and the income elasticity of demand for matinee movie tickets is -0.3. Suppose that income increases by 12%; what is the percentage change in the quantity demanded of movie tickets sold during the evening? How would you characterize the evening shows? Draw a theoretical diagram demonstrating this change.Compute the elasticity values. State the degree of elasticity and the nature of the goods.1. An increase in the price of Good Y from $5.00 to $6.00 causes the demand for Good X to decrease from 1000 units to 700 units.2. An increase in income from $3000 to $4000 causes the demand for chicken to increase from 6 to 7 kilos.3. The equation for a demand curve is P = 48 – 3Q. What is the elasticity in moving from a quantity of 5 to a quantity of 6?4. The equation for a supply curve is P = 3Q – 8. What is the elasticity in moving from a price of 4 to a price of 7?Suppose that your demand schedule for pizza is as follows: Price Quantity of Pizzas Demanded Quantity of Pizzas Demanded (Dollars) (Income = $20,000) (Income = $24,000) 8 40 50 10 32 45 12 24 30 14 16 20 16 8 12 Using the midpoint method, your price elasticity of demand as the price of pizzas increases from $10 to $12 is if your income is $20,000 and if your income is $24,000. If the price of a pizza is $12, your income elasticity of demand is as your income increases from $20,000 to $24,000. However, if the price of a pizza is $16, your income elasticity is .
- When price of tea in local cafe rises from birr 10 to 15 per cup, demand for coffee rises from 3000 cups to 5000 cups a day despite no change in coffee prices. a). Detemine cross price elasticity b). Based on the result, what kind of relation exists between the two goods?Consider the price elasticity of demand for potatoes vs houses. Which product has a larger price elasticity of demand and why? Please make sure you relate the most appropriate economic concepts and theory.The price of apples rises from $1.00 per pound to $1.50 per pound. As a result, the quantity of oranges demanded rises from 8,000 per week to 9,500. Calculate the cross-price elasticity of demand and say if the two goods are substitutes or complements.