EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Question
Chapter 19, Problem 2CTQ
To determine
Change in total revenues of traditional cigarettes.
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Students have asked these similar questions
A firm manufactures high priced gold plated wrist watches. The firm is considering lowering the price of its watches from the current $1000 per unit to $700 per unit. The firm currently sells 6000 units per year. The firm's staff economist believes the price elasticity of demand to be -3 over this price range.
If the firm lowers the price, will the total revenue increase, decrease or remain unchanged? Why?
If it lowers the price, what will be the new level of quantity demanded? Of new total revenue?
Would you suggest the firm to offer further price discount? Why? And Why not?
Explain how each of the factors would or would
not affect the price elasticity of demand for a good
or service that your company (or a company for
which you have an interest) produces?
Explain why price elasticity of demand is important for firms to consider when setting their prices to ensure that they maximize their profits.
Chapter 19 Solutions
EBK ECONOMICS TODAY
Ch. 19 - Calculate price elasticity of demand and explain...Ch. 19 - Prob. 19.2LOCh. 19 - Prob. 19.3LOCh. 19 - Prob. aFCTCh. 19 - Prob. bFCTCh. 19 - Prob. cFCTCh. 19 - Prob. 1CTQCh. 19 - Prob. 2CTQCh. 19 - Prob. 1FCTCh. 19 - Prob. 2FCT
Ch. 19 - 19-1. When the price of shirts emblazoned with a...Ch. 19 - Prob. 2PCh. 19 - 9-3. The diagram below depicts the demand curve...Ch. 19 - Prob. 4PCh. 19 - Prob. 5PCh. 19 - Prob. 6PCh. 19 - 19-7. In the market for hand-made guitars, when...Ch. 19 - Prob. 8PCh. 19 - Prob. 9PCh. 19 - Prob. 10PCh. 19 - Prob. 11PCh. 19 - A 5 percent increase in the price of digital apps...Ch. 19 - Prob. 13PCh. 19 - Assume that the income elasticity of demand for...Ch. 19 - At a price of $25,000, producers of midsized...Ch. 19 - Prob. 16P
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- Explain how each of the factors would or would not affect the price elasticity of demand for a good or service that your company (or a company for which you have an interest) produces?Help your classmates expand or re-focus on what they have observed.arrow_forwardWhat can you conclude about the price elasticity of demand in each of the following statements? “The pizza delivery business in this town is very competitive. I’d lose half my customers if I raised the price by as little as 10%.” “I owned both of the two Jerry Garcia autographed lithographs in existence. I sold one on eBay for a high price. But when I sold the second one, the price dropped by 80%.” “My economics professor has chosen to use the Krugman/Wells textbook for this class. I have no choice but to buy this book.” d. “I always spend a total of exactly $10 per week on coffee.”arrow_forwardA certain stuffed toy is popular during the holiday season, but sells for half the listed price after the holidays. Which factor in change in demand is at work here? Explainarrow_forward
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- Over the last three years, Christmas tree prices have increased from an average of $35 per tree to over $75 per tree. How would a Christmas tree farm and the overall industry respond to the price change under the following circumstances? Be sure to explain how your answer depends on the elasticity of supply. The price increase is a result of fewer Christmas tree farms harvesting trees in response to consumers purchasing more artificial trees. The effect of the price increase on the Christmas tree industry will be as follows: *In the long run, the industry supply curve shifts to the left. *In the long run, as tree farms sell fewer trees, they make losses and exit the industry. *In the short run, the increase in price leads to profits for tree farms. *In the short run, the tree farms exit the Christmas tree business and grow other lucrative plants.arrow_forwardMcdonald’s, a big burger joint, is charging $6 for its very famous Big Mac hamburger and selling around 20 million Big Mac in a year in Australia. Suppose Mcdonald’s increases the price of its Big Mac to $6.50. Consequently, quantity sold of the Big Mac falls to 17 million. How much revenue will Mcdonald’s gain? What can you infer about the price elasticity of demand (PED) for Mcdonald’s Big Mac? Assume in an alternative scenario, the increase in the price of Big Mac to $ 6.5 reduces its quantity sold to 19 million. How much revenue will Mcdonald’s gain now? What can you conclude about the PED now? Given the two scenarios presented in part a, which one do you think is more likely and why? Present evidence in 100 words or less to support your prediction. Suppose Mcdonals’s Big Mac and movie tickets have negative cross price elasticity of - 0.8. What does this number tell us on the relationship between the Big Mac and movie tickets? Suppose, The Village Cinemas, Australia’s leading…arrow_forwardWhat is the effect on Walkers Shoes’ total revenue of doubling the quantity of shoes which it supplies? What is the value of its marginal revenue? How does your answer relate to the value of the price elasticity of demand?arrow_forward
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