5. Choosing demand elasticity on a graphConsider the demand for a luxury good such as a yacht.You can plot three different straight lines through the three points X, Y, and Z on this graph. Place the blue line (circle symbol) so that it goes throughtwo of the points and shows the most likely demand curve for this type of good.Hint: Consider the relative elasticities of the different possible demand curves.120100Demand Curve80604020410121416LUXURY GOODS (Thousands per year)PRICE (Dollars per yacht)

The level by which price of a good or service affects its demand is referred to as its price…

Answered: 5. Choosing demand elasticity on a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
14. Suppose that when the price falls by 40% for a particular good, the quantity demanded of this good rises by 5%. The price elasticity of demand for this good is equal to: (show your calculations and workouts) a. 6 b. 8 c. 0.125 d. 0.5
QUESTION 25 Choose the words/phrases which most accurately complete this sentence: "If two goods are complements, their IS a. Cross-price elasticity, positive O b. Cross-price elasticity; negative O c. Own-price elasticity; negative O d. Own-price elasticity; positive
6. Elasticity and total revenue The following graph shows the daily demand curve for bikes in San Francisco. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. *graph 1* On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $30, $45, $60, $75, $90, $105, and $120 per bike. *graph 2* According to the midpoint method, the price elasticity of demand between points A and B is approximately ___ . Suppose the price of bikes is currently $30 per bike, shown as point B on the initial graph. Because the demand between points A and B is ___ , a $15-per-bike increase in price will lead to ___ in total revenue per day. In general, in order for a price decrease to cause a decrease in total revenue, demand must be ____.
2. Calculate the price elasticity for each of the following. State whether price elasticity of demand is elastic, unit elastic, or inelastic. Will revenue rise, decline, or stay the same with the given change in price? The price of pens rises 5%; the quantity demanded falls 10%. a. The price of a ticket to a Boston Red Sox baseball game rises from $10 to $12 a game. The quantity of tickets sold falls from 160,000 tickets to 144,000. C. The price of an economics textbook declines from $50 to $47.50. Quantity demanded rises from 1,000 to 1,075. d The price of water beds rises from $500 to $600. Quantity demanded falls from 100,000 to 80,000.
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B6
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6. With the aid of appropriate examples, outline the principal types of demand elasticity and their determinants. Explain and evaluate the importance of these elasticities to aid firms’ understanding of consumer behaviour in the markets for their goods and services?
1. Calculate the Price elasticity of demand, & for the following examples: a) Demand is given by Q = 50 – P at the price of $10. b) Demand is given by Q= 100 - P, at the price of $50. %3D c) Demand is given by Q= 25 - .25P, at the price of $40. d) Demand is given by Q = 20 - .1P, at the price of $80. e) Demand is given by Q = 60 – 1/3P, at the price of $60.
Explain only correct one...
QUESTION 4 The demand for apples has decreased by 2% in response to an income decreases of 19%, It follows that O a. The elasticity of demand with respect to income is equal to -0.5 O b. The elasticity of demand with respect to income is equal to +2 O. The slope of the Engel curve for apples is +2 Od. The elasticity of demand with respect to income is equal to +1 O e. None of the proposed answers is correct

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