Microeconomics - With Connect Plus Access
20th Edition
ISBN: 9781259660849
Author: McConnell
Publisher: MCG
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Chapter 20, Problem 2P
Suppose chat both wheat and corn have an income elasticity of 0.1. LO20.1
a. If the average income in the economy increases by 2 percent each year, by what percentage does the quantity
b. Given that average personal income doubles in the United States about every 30 years, by about what percentage does the quantity demanded of corn increase every 30 years, holding all other factors constant?
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When the price of a bar of chocolate is $1, demand is100,000 bars. When the price rises to $1.50, demandfalls to 60,000 bars. Calculate the price elasticity ofdemand according to the instructions below andexpress your answer in absolute value. [LO 4.1]a. Suppose price increases from $1 to $1.50.Calculate the price elasticity of demand interms of percent change, as described onpages 79–80.
Suppose that both wheat and corn have an income elasticity of 0.1 a. If the average income in the economy increases by 2 percent each year, by what percentage does the quantity demanded of wheat increase each year, holding all other factors constant? Holding all other factors constant, if 10 billion bushels are demanded this year, by how many bushels will the quantity demanded increase next year if incomes rise by 2 percent? b. Given that average personal income doubles in the United States about every 30 years, by about what percentage does the quantity demanded of corn increase every 30 years, holding all other factors constant?
**Asking for part (d) only**
Suppose the demand for crossing the Golden Gate Bridge is given by Q = 10,000 − 1,000P. (LO6)
a. If the toll (P) is $3, how much revenue is collected?
b. What is the price elasticity of demand at this point?
c. Could the bridge authorities increase their revenues
by changing their price?
d. In 2019, the San Francisco Bay area Water Emer-
gency Transportation Authority (WETA) announced it was considering the implementation of hovercraft service as a supplement to existing ferries. Suppose that a fast hovercraft alternative to the Golden Gate Bridge is implemented between Marin County and San Francisco. How would the new service affect the elasticity of demand for trips across the Golden Gate Bridge?
Chapter 20 Solutions
Microeconomics - With Connect Plus Access
Ch. 20 - Prob. 1DQCh. 20 - Prob. 2DQCh. 20 - Prob. 3DQCh. 20 - Prob. 4DQCh. 20 - Prob. 5DQCh. 20 - Prob. 6DQCh. 20 - Prob. 7DQCh. 20 - Prob. 8DQCh. 20 - Prob. 9DQCh. 20 - Prob. 10DQ
Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 1RQCh. 20 - Prob. 2RQCh. 20 - Prob. 3RQCh. 20 - Prob. 4RQCh. 20 - Prob. 5RQCh. 20 - Suppose that corn currently costs 4 per bushel and...Ch. 20 - Suppose chat both wheat and corn have an income...Ch. 20 - Prob. 3PCh. 20 - Prob. 4P
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