The cross price elasticity between two goods is +0.9, the initial prices of the two goods are P1=$2 and P2 = $3, the initial quantities of the goods are Q1 = 10,000 and Q2 = 8000. Calculate the new amount of Q2 demanded if P1 increases to $2.75
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- A recent report by the Centers for Disease Control looked at the relationship between the price of beer and the incidence of new cases of STD's. The report concluded that a beer tax increase of $.20 could reduce overall STD rates by 8.9%. Assume that a six pack cost $5.90 before the price increase. Calculate the cross price elasticity between beer and STD's. What is the sign of this cross-price elasticity? According to your estimate, are beer and STD's compliments or substitutes? Does your answer make sense? Explain.These questions require application of economic theory relating to elasticity of demand andsupply. All calculations must be shown in full. Answer ALL the questions.Q.3.1 A store that sells maize meal discovers that when the price of 1kg maize meal IsR24 per kilogram, the quantity demanded is 306 kgs per week. When the pricedecreases to R21 per kg, then the sales increase to 340 kgs per week. Use thisinformation to answer questions Q.3.1.1 and Q.3.1.2 below.Q.3.1.1 Determine the price elasticity of maize meal using the Arc method. (5)Q.3.1.2 Discuss the relationship between the price elasticity of maize mealand the total revenue the store received from the sales. Advise thestore on an appropriate pricing strategy.(7)Q.3.2 The store selling maize meal makes a further discovery, when the price of ricechanges from R30 per kg to R26 per kg, then the quantity of rice demandeddecreases from 1360 kg per month to 1238 kg per month. Use this informationto answer Q.3.2.1 and Q.3.2.2 below.Q.3.2.1…When the price of a gallon of milk increases from $6 to $8, quantity demanded decreases to 27 gallons. Assuming the price elasticity of demand for milk is -0.3, what is the original quantity demanded? (assuming further that this is the point elasticity relative to the original point on the demand curve.) Please make sure you give a numerical answer with no units and/or space or period (.) or comma (,) before or after your answer. Enter your answer here
- The cross price elasticity between two goods is +0.9, the initial prices of the two goods are P1 = $2 and P2 = $3, the initial quantities of the goods are Q1 = 10,000 and Q2 = 8000. Calculate the new amount of Q2 demanded if P1 increases to $2.75The demand equation for a certain brand of pencil is 100y? + 9t2 = 3600 where (y) represents the number (in thousands) of ten-packs demanded each week when the unit price is $(t). How fast is the quantity demanded increasing when the unit price per ten-pack is $14 and the selling price is dropping at the rate of $0.15 per ten-pack per week?Suppose that when income decreases by 4%, the quantity of margarine demanded rises by 1%. Knowingthis, the income elasticity (EI) for margarine is(A) EI = .25(B) EI = -1/4(C) EI = -4(D) EI = -3
- You have estimated that the price elasticity of demand for chai at your cafe is 0.9. If you lower the price of chai by 30% you should expect sales to rise by %. Type your numeric answer and submitMarket researchers estimate that the annual demand for ice cream in Gotham city is: qi = (200,000Pp1/4)/ (Pi3/2Pb1/2) where qi is the quantity demanded for ice cream in scoops, Pp is the price serving of pudding, Pb is the price per serving of brownies, and Pi is the price per scoop of ice cream. a. What does the cross-price elasticity of demand equal between ice cream and brownies? b. What type of commodities are ice cream and brownies?The demand for a good is QD = 19 – 2P + 4l where P and I represent price and income respectively. At price of P=1 and income l=32, determine what type of good this is (inferior, necessity, or luxury) by calculating the income elasticity of demand.
- Your firm, Content Colleague, is similar to Happy Worker, a Canadian company that designs and manufactures toys and collectibles. Your research analyst has estimated the demand function for your stuffed toy animals is: If you set the price of a plush toy at $6, the number of toys that consumers will buy is [ million. Q=30 million - (4 million x P).You have the following information for your product:i. The price elasticity of demand is -0.9.ii. The income elasticity of demand is 0.5.iii. The cross-price elasticity of demand between your good and a related goodis 2.0.What can you determine about consumer demand for your product from thisinformation?b) The price elasticity of demand for urban transit fares has been estimated to liebetween -0.1 and -0.6. Based on these results, what is the economic argument for raisingtransit fares? What political arguments might local governments and transit authoritiesencounter in opposition to these economic arguments?by using midpoint formula,calculate the elasticity of orange juice demanded.P(1)=1,49 per qtP(2)=1,89 per qtQ(1)=14 per monthQ(2)=12 per month a)-1,85b)-1,95c)-2