MICROECONOMICS-MEDIA OPS ACCESS
20th Edition
ISBN: 9780077660826
Author: McConnell
Publisher: MCG
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Chapter 6, Problem 5RQ
In 2006, Willem de Kooning’s abstract painting Woman III sold for $137.5 million. Portray this sale in a
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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?
1.Price elasticity= -13.33/6 =-2.66
Is the price elasticity of demand for small popcorn price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.
2.
Price Elasticity = (-)19.29/12.5= -1.54
Is the price elasticity of demand for hotdog price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.
3. Price elasticity is -2.39
Is the price elasticity of demand for movie tickets price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.
4. Compute and interpret the point elasticity of market supply of palay as price increases from Php 20 to Php 25.
5. Compute and interpret the arc elasticity of market supply of palay.
6. Among the producer groups in the Philippines, which group has the most elastic supply? Support your answer.
7. Assume that producers in Luzon can only produce 11 billion kg of palay at the time of harvest even if price reaches Php30 per kg, what will be the value of their own price elasticity of supply?
Chapter 6 Solutions
MICROECONOMICS-MEDIA OPS ACCESS
Ch. 6 - Explain why the choice between 1, 2, 3, 4, 5, 6,...Ch. 6 - Prob. 2DQCh. 6 - The income elasticities of demand for movies,...Ch. 6 - Research has found that an increase in the price...Ch. 6 - Prob. 5DQCh. 6 - Suppose that the total revenue received by a...Ch. 6 - Suppose that the total revenue received by a...Ch. 6 - Calculate total-revenue data from the demand...Ch. 6 - Prob. 4RQCh. 6 - In 2006, Willem de Koonings abstract painting...
Ch. 6 - Suppose the cross elasticity of demand for...Ch. 6 - Look at the demand curve in Figure 6.2a. Use the...Ch. 6 - Prob. 2PCh. 6 - Graph the accompanying demand data, and then use...Ch. 6 - Danny Dimes Donahue is a neighborhoods 9-year-old...Ch. 6 - What is the formula for measuring the price...Ch. 6 - ADVANCED ANALYSIS Currently, at a price of 1 each,...Ch. 6 - Prob. 7P
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- Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose from $95 to $105, what would be the elasticity of supply if the quantity supplied changed from a. 38 to 42? b. 78 to 82? c. 54 to 66?arrow_forward(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?arrow_forward(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.arrow_forward
- Suppose you are in change 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 companys 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.arrow_forwardThe 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?arrow_forwardBetween male and female customers, which consumer group has a more elastic demand? Support your answer Given the quantity demanded of all types of consumers, compute the total revenue at various prices of Krispy What happens to the total revenue when the price of Krispy Kreme increases from PhP 20 to PhP 30? Based 0n your answer in 12, is the market demand for Krispy Kreme inelastic, unitary elastic, or inelastic? Explain your answer.arrow_forward
- Problem 2: From the data shown in Table about supply of alarm clocks, calculate the price elasticity of supply from: point J to point K, point L to point M, and point N to point P. Classify the elasticity at each point as elastic, inelastic, or unit elastic. Points Price Quantity Supplied J 8 50 K 9 70 L 10 80 M 11 88 N 12 95 P 13 100arrow_forwardSuppose the price elasticity of demand for the market of mobile phones is 0.90. If all mobile-phone companies simultaneously increased their prices, will total revenue in the industry increase or decrease? If a single mobile-phone company increased its price, would you expect the company’s total revenue to increase or decrease? Explain. Suppose that the price in the market is initially $10 and the quantity demanded is 100 units. If the price in this market increases by 10%, what will be the percentage change in the quantity demanded? Give me long detalied answer pleasearrow_forwardSuppose the price elasticity of demand for the market of mobile phones is 0.90. If all mobile-phone companies simultaneously increased their prices, will total revenue in the industry increase or decrease? If a single mobile-phone company increased its price, would you expect the company’s total revenue to increase or decrease? Explain. Suppose that the price in the market is initially $10 and the quantity demanded is 100 units. If the price in this market increases by 10%, what will be the percentage change in the quantity demanded?arrow_forward
- Note: Please do part 4 and 5 Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity demanded to 450 per day. Compute the price elasticity of demand between these two points. Would you expect total revenues to rise or fall? Explain. Suppose you have reduced the average price of a meal to $18 and are considering a further reduction to $16. Another survey shows that the quantity demanded of meals will increase from 450 to 500 per day. Compute the price elasticity of demand between these two points. Would you expect total revenue to rise or fall as a result of this second price reduction? Explain. Compute total revenue at the three meal prices. Do these totals confirm your answers in (b) and (d) above?arrow_forwardYou are the manager of a firm that receives revenues of $20,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is −3, and the cross-price elasticity of demand between product Y and X is −1.6.How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent?Instructions: Enter your response rounded to the nearest dollar. If you are entering a negative number, be sure to use a (−) sign. $ _____________arrow_forwardThe prices and elasticities for some different types of food are summarised in Table 1. Table 1: Price elasticities of demand for different types of food. Food Categories Calories per serving Price per 100 g ($) Typical Spending per week ($) Price Elasticity of Demand (in absolute value) Fruit 660 0.4 2 1.13 Vegetables 140 0.35 3.5 0.85 Pasta 1550 0.4 3 0.88 Bread 950 0.6 2.5 0.29 Snacks 430 1.2 5 0.27 Candy 1750 0.7 8 0.30 Milk -A 2100 0.1 2.5 1.78 Milk -B 880 0.2 1.5 1.98 (a) Discuss the most possible cause for the difference in price elasticity of demand between milk (type B) and bread. (b) Suppose that a consumer currently spends on average $30 per month on high-calorie milk and that the price of high-calorie will milk increase by 10% next month.Estimatethe expected percentage change in the quantity demanded for high-calorie milk products. In addition, calculate the expected change in revenue for sellers of high-calorie milk firms after the price change.…arrow_forward
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