1. Jeff Jones at Ice try ( olers reduced the price of Inc coolers by $10 from the usual $40. Weekly sales increased from 10 to 20 InC Coolers per week. a. What is the arc price elasticity of demand? b. Jeff is considering a further price reduction. What would be the effect of the reduction on revenues? How about profits? Revenues: Profits: Increase/ Decrease / Can't tell Increase/ Decrease / Can't tell

1. Jeff Jones at Ice try ( olers reduced the price of Inc coolers by $10 from the usual $40. Weekly sales increased from 10 to 20 InC Coolers per week. a. What is the arc price elasticity of demand? b. Jeff is considering a further price reduction. What would be the effect of the reduction on revenues? How about profits? Revenues: Profits: Increase/ Decrease / Can't tell Increase/ Decrease / Can't tell

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following is the formula for the price elasticity of demand for a commodity? Select one: A. percentage change in price percentage change in quantity demanded B. O C. change in price change in quantity demanded percentage change in quantity demanded percentage change in price change in quantity demanded change in price
5. Suppose that the price elasticity of the demand is 0.76. If we increase the price ofthe the demanded product, how would this affect the revenue? Explain
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4. Graph the supply and demand curves and use the midpoint (averages) formula to calculate the respective price elasticities of supply and demand over the price range given. Then determine over what range of prices supply and demand are elastic, unit elastic, or inelastic. E₁ QS 2400 2200 1900 1500 1000 500 Price $14 12 10 8 6 4 QD ol 500 1000 1500 2000 2500 Ed
1. In general, a flatter demand curve is more likely to be: * Unit price elastic Price elastic Price inelastic Perfectly inelastic nlt breadand electricity
3. Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run. a. if the price of heating oil rises from $1.80 to $2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.) b. Why might this elasticity depend on the time horizon?
15. Use the graph to answer the question that follows. What is the price elasticity of demand when price increases from $2 to $4? 0.2 0.5 2 3 5
5.19 explain.
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1. Online the timing and tailoring of prices to specific models of products is the key to successful pricing in online markets. And “Thanks to the ready availability of data in online markets, a pricing manager can easily approximate the elasticity of demands for the different products it sells online.” Assuming a 10 percent decrease in price increases sales by 28 percent, calculate the price elasticity of demand? If the wholesale price of the online product is $50 and sells at a price comparison site that charges $.50 per click and boasts a conversion rate of 5 percent (an average of 20 clicks are needed to generate a sale). What price should you charge for the product? What is the optimal markup on cost? 2. The authors assert that price sensitivity is affected by (1) product life cycles, and (2) numbers of competitors. In fact, “when the number of competing sellers doubles, a firm’s elasticity of demand is expected to double (and you should be able to verify this through…