3. The accompanying table shows the price and yearly quantity sold of souvenir T- shirts in the town of Silver Lake according to the average income of the tourists visiting. Price of T-shirt Quantity of T-shirts demanded when the average tourist income is $20,000 Quantity of T-shirts demanded when the average tourist income is $30,000 $4 3,000 5,000 $5 2,400 4,200 $6 1,600 3,000 $7 800 1,800 a. Using the midpoint method, calculate the price elasticity of demand when the price of a T-shirt rises from $5 to $6 and the average tourist income is $20,000. Also calculate it when the average tourist income is $30,000. b. Using the midpoint method, calculate the income elasticity of demand when the price of a T-shirt is $4 and the average tourist income increases from $20,000 to $30,000. Also calculate it when the price is $7. 4. In each of the following cases, do you think the price elasticity of supply is (i) perfectly elastic; (ii) perfectly inelastic; (iii) elastic, but not perfectly elastic; or (iv) inelastic, but not perfectly inelastic? a. An increase in demand this summer for luxury cruises leads to a huge jump in the sales price of a cabin on the Queen Mary 2. b. The price of a kilowatt of electricity is the same during periods of high electricity demand as during periods of low electricity demand. c. Fewer people want to fly during February than during any other month. The airlines cancel about 10% of their flights as ticket prices fall about 20% during this month. d. Owners of vacation homes in Maine rent them out during the summer. Due to the soft economy this year, a 30% decline in the price of a vacation rental leads more than half of homeowners to occupy their vacation homes themselves during the summer.
3. The accompanying table shows the price and yearly quantity sold of souvenir T- shirts in the town of Silver Lake according to the average income of the tourists visiting. Price of T-shirt Quantity of T-shirts demanded when the average tourist income is $20,000 Quantity of T-shirts demanded when the average tourist income is $30,000 $4 3,000 5,000 $5 2,400 4,200 $6 1,600 3,000 $7 800 1,800 a. Using the midpoint method, calculate the price elasticity of demand when the price of a T-shirt rises from $5 to $6 and the average tourist income is $20,000. Also calculate it when the average tourist income is $30,000. b. Using the midpoint method, calculate the income elasticity of demand when the price of a T-shirt is $4 and the average tourist income increases from $20,000 to $30,000. Also calculate it when the price is $7. 4. In each of the following cases, do you think the price elasticity of supply is (i) perfectly elastic; (ii) perfectly inelastic; (iii) elastic, but not perfectly elastic; or (iv) inelastic, but not perfectly inelastic? a. An increase in demand this summer for luxury cruises leads to a huge jump in the sales price of a cabin on the Queen Mary 2. b. The price of a kilowatt of electricity is the same during periods of high electricity demand as during periods of low electricity demand. c. Fewer people want to fly during February than during any other month. The airlines cancel about 10% of their flights as ticket prices fall about 20% during this month. d. Owners of vacation homes in Maine rent them out during the summer. Due to the soft economy this year, a 30% decline in the price of a vacation rental leads more than half of homeowners to occupy their vacation homes themselves during the summer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
The wow expert Hand written solution is not allowed.
Transcribed Image Text:3. The accompanying table shows the price and yearly quantity sold of souvenir T-
shirts in the town of Silver Lake according to the average income of the tourists visiting.
Price of T-shirt Quantity of T-shirts demanded when the average tourist income is
$20,000 Quantity of T-shirts demanded when the average tourist income is $30,000 $4
3,000 5,000 $5 2,400 4,200 $6 1,600 3,000 $7 800 1,800
a. Using the midpoint method, calculate the price elasticity of demand when the price
of a T-shirt rises from $5 to $6 and the average tourist income is $20,000. Also
calculate it when the average tourist income is $30,000.
b. Using the midpoint method, calculate the income elasticity of demand when the
price of a T-shirt is $4 and the average tourist income increases from $20,000 to
$30,000. Also calculate it when the price is $7.
4. In each of the following cases, do you think the price elasticity of supply is (i)
perfectly elastic; (ii) perfectly inelastic; (iii) elastic, but not perfectly elastic; or (iv)
inelastic, but not perfectly inelastic?
a. An increase in demand this summer for luxury cruises leads to a huge jump in the
sales price of a cabin on the Queen Mary 2.
b. The price of a kilowatt of electricity is the same during periods of high electricity
demand as during periods of low electricity demand.
c. Fewer people want to fly during February than during any other month. The airlines
cancel about 10% of their flights as ticket prices fall about 20% during this month.
d. Owners of vacation homes in Maine rent them out during the summer. Due to the
soft economy this year, a 30% decline in the price of a vacation rental leads more than
half of homeowners to occupy their vacation homes themselves during the summer.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education