1. (1) The graph below shows the demand curves of two products by Ghana Nuts Company Ltd. Use the information provided on the graph to answer the questions that follow: Price Cedis per gallon 30 A B 25 D1 D2 200 225 300 Quantity (gallons per day) (a) Calculate the price elasticity of demand for D, between point A and point C, and the price elasticity of demand for D2 between point A and point B. which of the two demand curve is more elastic? Briefly explain. (b) Suppose Ghana Nut is initially selling 200 gallons per day at a price of C30.00 per gallon, calculate the total revenue for Ghana Nuts Company Ltd. at price C30. If they cut the price to C25.00 per gallon and their demand curve is D1, what will be the change in their revenue? What will be the change in their revenue if demand curve is D2? 2. Suppose quantity demanded of beans increase from 1500 bags to 1800 bags as a result of an increase in the price of rice from GH¢80 to GH¢100. Calculate the cross price elasticity of demand for the two goods. Are the two goods substitutes or complements? Explain.

1. (1) The graph below shows the demand curves of two products by Ghana Nuts Company Ltd. Use the information provided on the graph to answer the questions that follow: Price Cedis per gallon 30 A B 25 D1 D2 200 225 300 Quantity (gallons per day) (a) Calculate the price elasticity of demand for D, between point A and point C, and the price elasticity of demand for D2 between point A and point B. which of the two demand curve is more elastic? Briefly explain. (b) Suppose Ghana Nut is initially selling 200 gallons per day at a price of C30.00 per gallon, calculate the total revenue for Ghana Nuts Company Ltd. at price C30. If they cut the price to C25.00 per gallon and their demand curve is D1, what will be the change in their revenue? What will be the change in their revenue if demand curve is D2? 2. Suppose quantity demanded of beans increase from 1500 bags to 1800 bags as a result of an increase in the price of rice from GH¢80 to GH¢100. Calculate the cross price elasticity of demand for the two goods. Are the two goods substitutes or complements? Explain.

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Description: (1) The graph below shows the demand curves of two products by GhanaNuts Company Ltd. Use the information provided on the graph to answer thequestions that follow:PriceCedisper gallon30B25D1D2200 225300Quantity(gallons per day)(a) Calculate the pric

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Practice Pack

OFFON

(1) The graph below shows the demand curves of two products by Ghana
Nuts Company Ltd. Use the information provided on the graph to answer the
questions that follow:
Price
Cedis
per gallon
30
B
25
D1
D2
200 225
300
Quantity
(gallons per day)
(a) Calculate the price elasticity of demand for D, between point A and point
C, and the price elasticity of demand for D2 between point A and point B.
which of the two demand curve is more elastic? Briefly explain.
(b) Suppose Ghana Nut is initially selling 200 gallons per day at a price of
C30.00 per gallon, calculate the total revenue for Ghana Nuts Company
Ltd. at price C30. If they cut the price to C25.00 per gallon and their
demand curve is D1, what will be the change in their revenue? What will
be the change in their revenue if demand curve is D2?
2. Suppose quantity demanded of beans increase from 1500 bags to 1800 bags
as a result of an increase in the price of rice from GH¢80 to GH¢100.
Calculate the cross price elasticity of demand for the two goods. Are the two
goods substitutes or complements? Explain.

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