EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 8.4, Problem 1MQ
To determine
To find the reason for veretical distance between the
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Reid has determined that the daily demand for doughnuts at his favorite bakery is described by the following equation:
Qd = 3,300 - 3000P
where Qd is the daily quantity demanded in number of doughnuts and P is the price per doughnuts in dollars.
a. What is the point price elasticity of demand at a price of $0.70?
b. Assume the price is currently $0.70. What is the marginal revenue obtained by selling one additional doughnut?
c. The marginal cost of producing an additional doughnut is $0.10. What price should the bakery establish in order to maximize profits?
The demand curve for product a is given as Q = 2000 - 20P.
a. How many units will be sold at $10?
b. At what price would 2,000 units be sold? 0 units? 1,500?
c. Write equations for total revenue and marginal revenue (in terms of Q).
d. What will be the total revenue at a price of $70? What will be the marginal revenue?
e. What is the point elasticity at a price of $70?
f. If price were to decrease to $60, what would total revenue, marginal revenue, and point elasticity be now?
g. At what price would elasticity be unitary?
Explain classification of linear supply functions by types of elasticities.
Chapter 8 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 8.3 - Prob. 1MQCh. 8.3 - Prob. 2MQCh. 8.3 - Prob. 1.1MQCh. 8.3 - Prob. 2.1MQCh. 8.4 - Prob. 1TTACh. 8.4 - Prob. 2TTACh. 8.4 - Prob. 1MQCh. 8.4 - Prob. 2MQCh. 8.5 - Prob. 1TTACh. 8.5 - Prob. 2TTA
Ch. 8.5 - Prob. 1.1TTACh. 8.5 - Prob. 2.1TTACh. 8.5 - Prob. 1MQCh. 8.5 - Prob. 2MQCh. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQCh. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Prob. 8.3PCh. 8 - Prob. 8.4PCh. 8 - Prob. 8.5PCh. 8 - Prob. 8.6PCh. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.10P
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- In an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price and an 11 percent increase in advertising. If the price elasticity of demand is 1.5 and the advertising elasticity of demand is +0.6, would you expect an increase or decrease in total revenues?arrow_forwardOver 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_forwardTotal revenue from the sale of X is given by the equation R=60Q-Q2. Calculate the value of marginal revenue when the point price elasticity of demand when marginal revenue is -2.arrow_forward
- Assuming a simple linear market demand curve for good X, explain the relationship between price, total and marginal revenues, and elasticity of demand. Using your answer, explain why might a revenue maximizing firm selling a luxury good reduce its product price.arrow_forwardThe demand curve for product a is given as Q = 2000 - 20P. How many units will be sold at $10? At what price would 2,000 units be sold? 0 units? 1,500? Write equations for total revenue and marginal revenue (in terms of Q). What will be the total revenue at a price of $70? What will be the marginal revenue? What is the point elasticity at a price of $70? If price were to decrease to $60, what would total revenue, marginal revenue, and point elasticity be now? At what price would elasticity be unitary?arrow_forwardThere are three sets of price and quantity below for a firm.P1 = $40 Q1 = 20P2 = $30 Q2 = 40 P1 = 30 Q1 = 40P2= 25 Q2 = 50 P1 = 25 Q1 = 50P2 = 20 Q2 = 60 Given the information above on the four sets of price and quantity 1. Using the price elasticity of demand (PED) formula (using the average formula),calculate the PED for each set of price and quantity demanded change, and determine inabsolute value the range of elasticity? 2. Using the information of above, calculate the total revenue (TR) for each and given theinformation from parts a, b and c, predict the price this firm will charge?arrow_forward
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