Study Guide for Microeconomics
9th Edition
ISBN: 9780134741123
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 19, Problem 1E
(a)
To determine
The demand curve
(b)
To determine
The sense of fairness
(c)
To determine
The drop in profit.
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Suppose there are two types of e-book consumers: 50 "standard" consumers with demand Q=25-P and 100 "rule of thumb" consumers who buy 10 e-books only if the price is less than $10. (Their demand curve is given by Q=10 if P<10 and Q=0 if P≥10.) Using the multi-point drawing tool, graph the resulting total demand curve for e-books. Label this line "Demand."
The table below provides elasticity estimates, use them to answer the questions that follow.
Type of Elasticity Estimate Price elasticity of demand for uber rides -1.20 Price elasticity of demand for taxis -0.60 Cross-price elasticity of demand for uber and taxis 0.50 Income elasticity of demand for uber rides 0.95 Price elasticity of supply for taxis 0.40
Which of the following is true? a. Uber rides are a normal good and taxis are a substitute for ubers b. Uber rides are an inferior good and taxis are a substitute for ubers c. Uber rides are a normal good and taxis are a complement for ubers d. Uber rides are an inferior good and taxis are a complement for ubers
Suppose the price for an Uber ride in Austin, TX decreases from $15 to $12 causing the quantity of rides demanded to increase from 1000 to 1600. Using the midpoint method, the price elasticity of demand for an Uber ride is ________.
Group of answer choices:
-0.50
-2.08
-3.0
Chapter 19 Solutions
Study Guide for Microeconomics
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- The following graph shows two known points (X and Y) on a demand curve for oranges. According to the midpoints formula, the price elasticity of demand for oranges between point X and point Y is approximately ______ , which suggests that the demand for oranges is ________ between points X and Y.arrow_forwardUse the endpoint method to compute the price elasticity on D1. The endpoint method computes the percent change in quantity or price as the percent change from the starting value. For instance, using the midpoint method to compute elasticity, if we are moving from A to B on D1, the percent change in price is computed as a percent of $5 and the percent change in quantity as the percent change in price computed as a percent of 100.arrow_forwardSuppose the market demand for pizza is given by Qd = 300 - 20P and the market supply for pizza given by Qs = 20P – 100. Suppose the price of hamburgers, a substitute for pizza, doubles. This leads to a doubling of the demand for pizza (at each price consumers demand twice as much pizza as before). Write the equation of the new market demand for pizza. Find the new equilibrium price and quantity for pizza. If the price of Pizza is $2 what is the elasticity of demand and supply for pizza? Now if the price increases to $5 calculate the demand and supply elasticities.arrow_forward
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- If the price of X decreases and this decreases the demand for Y, thenarrow_forwardWhat is the standard price using the elasticity equation?arrow_forwardIn the figure above, if price decreases from $80 to $60 , an arrow representing the quantity effect Multiple Choice A. will point upward B. will point downward C. will be shorter than (and in the opposite direction of) the arrow representing the price effect. D. will be shorter than (and in the same direction of) the arrow representing the price effect. E. will point in the opposite direction in which total revenue will movearrow_forward
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