4. Company XYZ sells an average of 300 gallons of paint per week at a price of $5 per gallon. Previously selling a quantity of 500 gallons per week at a price of $4 per gallon, determine the following: price elasticity formula Calculate the coefficient of price elasticity Determine whether demand is elastic, inelastic, or unitary with respect to price and why. 5. If the average family income increases from $20,000 to $30,000 per year, the price of laptops of a particular brand is $1,000, and its sales increase from 500 units to 525 units, determine the following: Income Elasticity Formula Calculate the income elasticity coefficient Determine whether demand is inelastic or elastic with respect to income and why. Say if it is a normal or inferior good and why 6. If the price of parking at an entertainment center increases from $4 an hour to $5 and the number of people attending the center drops from 200 people to 150, determine the following: Cross elasticity formula (“cross – price”) Calculate the coefficient of cross elasticity Determine if they are complementary, substitute, or independent (unrelated) goods and why
Problems 4 to 7 require presenting the procedure used, beginning by including the formula, the mathematical procedure in order, correctly, and the interpretation of the result (why, the criteria applied). The interpretation must be consistent with the procedure used and calculation, otherwise it will be counted as an incorrect answer.
4. Company XYZ sells an average of 300 gallons of paint per week at a
- price elasticity formula
- Calculate the coefficient of
price elasticity - Determine whether demand is elastic, inelastic, or unitary with respect to price and why.
5. If the average family income increases from $20,000 to $30,000 per year, the price of laptops of a particular brand is $1,000, and its sales increase from 500 units to 525 units, determine the following:
- Income Elasticity Formula
- Calculate the income elasticity coefficient
- Determine whether demand is inelastic or elastic with respect to income and why.
- Say if it is a normal or inferior good and why
6. If the price of parking at an entertainment center increases from $4 an hour to $5 and the number of people attending the center drops from 200 people to 150, determine the following:
- Cross elasticity formula (“cross – price”)
- Calculate the coefficient of cross elasticity
- Determine if they are complementary, substitute, or independent (unrelated) goods and why
7. If the price of good a (Pa) is $5, the price of good b (Pb) is $4 and the quantity purchased of good a (Qa) is 10 units and the quantity of the quantity purchased of good b (Qb) is 20 units, using the budget equation determine the following:
- The monetary value of spending on the good "a"
- The monetary value of spending on good "b"
- The income (budget) spent by the consumer on both products
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