6) Suppose a consumer's demand function is x(p) =100-3p.a. What's the general equation for the own-price elasticity of demand for this consumer?b. What's the price elasticity of demand when p=25?c. Suppose instead that the demand function is (PP) = 100-3px +Py. How does the equation for own-price elasticity change?d. Continue with the demand equation in (c). Suppose p=25. What's the cross-price elasticity for x? e. Continuing with part (d), what's the cross-price elasticity when the price of y is equal to 50?

6) Suppose a consumer's demand function is x(p) =100-3p.a. What's the general equation for the own-price elasticity of demand for this consumer?b. What's the price elasticity of demand when p=25?c. Suppose instead that the demand function is (PP) = 100-3px +Py. How does the equation for own-price elasticity change?d. Continue with the demand equation in (c). Suppose p=25. What's the cross-price elasticity for x? e. Continuing with part (d), what's the cross-price elasticity when the price of y is equal to 50?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section: Chapter Questions

Problem 1QP

See similar textbooks

Similar questions

What are the major determinants of a products price elasticity of demand? Studies indicate that the demand for Florida oranges, Bayer aspirin, watermelons, and airfares to Europe are elastic. Why?
Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.
Suppose Sally buys exactly five bars of English toffee each week, regardless of whether the toffee bars are regularly priced at 1 or on sale for 0.50. Based on this information, what is Sallys price elasticity of demand for English toffee in this price range? a. 0 b. 1 c. Infinity d. Cannot be determined.
Suppose the market demand for a product is given by this inverse demand equation P = 100 - 2Q^D. Furthermore, you know that initially 40 units are demanded in this market. Then, there is an increase in price by 50%. A. Calculate the price elasticity of demand as price increases by 50% from the initial level. (Use the midpoint method.) Interpret the figure you get for elasticity. B. Will the change in price increase or decrease the total revenue of the producers of this product? By how much? C. Graph and calculate the price effect and the quantity effect. Does this match your answer to part (B)?
25) Which statement is TRUE? Elasticity of demand attempts to measure how fast quantity demanded increases when price increases. The elasticity of demand is always the same as the elasticity of supply. If the elasticity of demand is –4, then economists know that the price is increasing at a faster rate than quantity demanded. The price elasticity of demand is always a negative number, but economists generally ignore the negative sign. 28) To draw a demand curve for commodity X, the only information needed is the total utility received from X. True False 31) Which statement is FALSE? The consumer is assumed to maximize marginal utility. Marginal utility is usually smaller than total utility. Marginal utility generally diminishes as more of a good is consumed. To calculate total utility, sum the marginal utilities of the individual units consumed.
4) Provide a simple definition of the price elasticity of demand and explain why knowing the price elasticity for her product is useful to the firm's manager.
Suppose the price elasticity of supply for a good is 2.0. This means ... Group of answer choices The supply of this good is elastic. Inputs used to produce this good are probably plentiful and/or cheap. The supply of this good is elastic. Inputs used to produce this good are probably rare and/or expensive. The supply of this good is inelastic. Inputs used to produce this good are probably plentiful and/or cheap. No answer text provided. The supply of this good is inelastic. Inputs used to produce this good are probably rare and/or expensive.
6.
Suppose the own price elasticity of demand for good X is −2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is −6. Determine how much the consumption of this good will change if:Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (−) sign.a. The price of good X decreases by 5 percent. percentb. The price of good Y increases by 10 percent. percentc. Advertising decreases by 2 percent. percentd. Income increases by 3 percent. percent
The accompanying table lists the cross-price elasticities of demand for several goods, where the percent quantity change is measured for the first good of the pair, and the percent price change is measured for the second good. ( please see image) a. Explain the sign of each of the cross-price elasticities. What does it imply about the relationship between the two goods in question? b. Compare the absolute values of the cross-price elasticities and explain their magnitudes. For example, why is the cross-price elasticity of McDonald’s burgers and Burger King burgers less than the cross-price elasticity of butter and margarine? c. Use the information in the table to calculate how a 10% increase in the price of Pepsi affects the quantity of Coke demanded. d. Use the information in the table to calculate how a 5% decrease in the price of gasoline affects the quantity of SUVs demanded.
Q2) The accompanying table lists the cross-price elasticities of demand for several goods, where the percent quantity change is measured for the first good of the pair, and the percent price change is measured for the second good. a. Explain the sign of each of the cross-price elasticities. What does it imply about the relationship between the two goods in question? b. Compare the absolute values of the cross-price elasticities and explain their magnitudes. For example, why is the cross-price elasticity of McDonald’s burgers and Burger King burgers less than the cross-price elasticity of butter and margarine? c. Use the information in the table to calculate how a 10% increase in the price of Pepsi affects the quantity of Coke demanded. d. Use the information in the table to calculate how a 5% decrease in the price of gasoline affects the quantity of SUVs demanded.
Print newspapers are losing customers and the local newspaper is currently priced at $1.50. The quantity demanded at that price is 25,000. If the newspaper raises its price to $2.00, the quantity demanded drops to 18,000. What is the coefficient (Ed) of the price elasticity of demand? Use the arc formula and interpret the meaning of the coefficient you derive. Is the demand elastic or inelastic or unit elastic? By raising the price of its newspapers as the local newspaper business helped or harmed its Total Revenues?