ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423548
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 5, Problem 2.4PA
To determine
The reason for a greater
Concept Introduction:
Price Elasticity of Demand: It is the degree of responsiveness to change in quantity demanded due to change in price level.
The formula for measuring elasticity of demand is given as follows:
Where,
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23) Suppose the price elasticity of demand for a product is 1.8. If a supplier wants to increase revenue, they shoud (increase or decrease price- SELECT ONE) increase
24) Goods that are considered luxuries tend to be more (price elastic or price inelastic- SELECT ONE)price elastic
25) When the price is increased and total revenues increase, the elasticity of demand is (price elastic or price inelastic- SELECT ONE)price inelastic
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Suppose the price of a good increased from $3 to $4. In response, the consumer has decreased his consumption from 15 units to 10 units. The price elasticity of demand is
#4 Determining the price elasticity of demand of a product involves all of the following factors, but NOT
the total number of firms in a market.
the availability of substitutes to the product.
whether the product is a luxury or a necessity.
Chapter 5 Solutions
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Ch. 5 - (Calculating Price Elasticity of Demand) Suppose...Ch. 5 - (Price Elasticity and Total Revenue) Fill in the...Ch. 5 - (Categories of Price Elasticity of Demand) For...Ch. 5 - Prob. 2.4PACh. 5 - (Determinants of Price Elasticity) Would the price...Ch. 5 - (Price Elasticity of Supply) Calculate the price...Ch. 5 - (Cross-Price Elasticity) Rank the following in...Ch. 5 - Prob. 4.8PACh. 5 - (Other Elasticity Measures) Complete each of the...
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Similar questions
(Price Elasticity of Supply) Calculate the price elasticity of supply for each of the following combinations of price and quantity supplied. In each case, determine whether supply is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. a. Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 400 units. b. Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 500 units. c. Price falls from $2.25 to $1.75; quantity supplied remains at 600 units. d. Price increases from $1.75 to $2.25, quantity supplied increases from 466.67 units to 600 units.
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(Determinants of Price Elasticity) Would the price elasticity of demand for electricity be more elastic over a shorter or a longer period of time?
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QUESTION 15
The price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good.
True
False
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Question 4The Pear company sells a smart phone for $250. Its sales have averaged 8,000 units per month over the last year. Recently, its closest competitor Banana company reduced the price of its smart phone from $350 to $300. As a result, Pear’s sales declined by 1,500 units per month.
(a) What is the cross price elasticity of demand between the Pear and Banana smart phone? Use the averaging formula. What does this indicate about the relationship between the two products?
(b) If the Pear company knows that the price elasticity of demand for its phone is -1.5, what price would the Pear company have to charge to sell the same number of units as it did before the Banana company price cut? Assume that Banana company holds its price of its phone constant at $300. Use the averaging formula.
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#8
What happens to total revenue (TR) if the price rises on a product with demand that is price elastic?
Total revenue will remain the same.
Total revenue will fall.
Total revenue will rise.
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8- Price elasticity of demand does not reflect in measurement: 1)Unit elastic2)Perfectly elastic and inelastic3)Relatively elastic4)Interior good
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Question 1.
Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.
explain and provide graphs where applicable
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12.
What is the price elasticity of demand? Price elasticity of supply?
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1. The price elasticity of hamburgers has been estimated at -1.20 for a wide range of prices. If prices increase by 15%, what would be the impact on the quantity of hamburgers sold?
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P1= $4.50 Q1= 45
P2= $5.00 Q2= 40
a) what is price elasticity of demand
b) given the price elasticity of demand coefficient you have calculated. What would happen to the quantity demanded in percentage terms if the price increased by 10% in this range ?
c) what would be the effect of the price increase above on total revenue? Explain.
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The price of an iphone 12 is initially £1250 at which 3.8 million phones are sold. A year later the price of an iphone 12 is £950 at which 5.5 million phones are sold. What is the price elasticity of demand?
a) -1.86
b) -0.54
c) -6.03
d) -1.90
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16- What is the price elasticity of supply for a good that sees a 1% increase in quantity supplied for a 5% increase in price?
0.2
1
4
5
6
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