The government decides to pass a law that requires all automobiles to have side andrear airbags. This law will increase the production costs by $3500 for all automobiles. Ifthe demand for automobiles is highly inelastic, the carmakers willshare this cost equally with car-buyersO pass almost all of this cost along to car-buyerspass very little of this cost along to car-buyersO stop producing automobilesQuestion 8The income elasticity of demand for peaches has been estimated to be 1.43. If incomegrows by 15 percent in a period, how will that affect total revenue from peaches inthat period, all other things unchanged?Total revenue will rise.Total revenue will fall.Total revenue will remain unchanged.O Not enough information is given to answer the question.

The demand for automobiles is highly inelastic as compared to the supply of automobiles. An increase…

The government decides to pass a law that requires all automobiles to have side and rear airbags. This law will increase the production costs by $3500 for all automobiles. If the demand for automobiles is highly inelastic, the carmakers will share this cost equally with car-buyers pass almost all of this cost along to car-buyers pass very little of this cost along to car-buyers stop producing automobiles

The government decides to pass a law that requires all automobiles to have side and rear airbags. This law will increase the production costs by $3500 for all automobiles. If the demand for automobiles is highly inelastic, the carmakers will share this cost equally with car-buyers pass almost all of this cost along to car-buyers pass very little of this cost along to car-buyers stop producing automobiles

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 8E: The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per...

See similar textbooks

Similar questions

The 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?
A movie production company faces a linear demand curve for its film, and it seeks to maximize total revenue from the films distribution. At what level should the price be set? Where is demand elastic, inelastic, or unit elastic? Explain.
Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?
Why is the supply curve with constant unitary elasticity a straight line?
According to the previous discussion, what factors influence the price elasticity of demand for cigarettes? What other factors not mentioned in the article might influence the price elasticity of demand for cigarettes?
Explain why using the midpoint formula for calculating the elasticity of demand gives the same result whether price increases or decreases, but using the initial price and quantity instead of the average does not.
When someones kidneys fail, the person needs to have medical treatment with a dialysis machine (unless or until they receive a kidney transplant) or they will die. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that the supply of such dialysis machines will primarily determine the pure.
Describe the general appearance of a demand or a supply curve with infinite elasticity.
From the data in Table 5.6 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.
What would the gasoline price elasticity of supply mean to UPS or FedEx?
Suppose you could buy shoes one at a time, miter than in pain. What do you predict the cross-price elasticity for left shoes and right shoes would be?
The equation for a demand curve is P=2/Q. What is the elasticity of demand as price falls from 5 to 4? What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same?