8.3. The demand for Firm B is said to be elastic. Do you agree with this statement? Justify your answer by calculating the elasticity coefficient by aid of the ARC (midpoint) formula.
8.3. The demand for Firm B is said to be elastic. Do you agree with this statement? Justify your answer by calculating the elasticity coefficient by aid of the ARC (midpoint) formula.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Answer 8.3 only
![For scenario 5, answer the following questions:
8.1. The revenue for both firms changed due to an increase in supply. Do you recommend
that both Firm A and Firm B should increase supply to generate higher revenue?
Substantiate your answer by calculating the new revenue for both firms after the supply
increase.
The demand for Firm A is said to be elastic. Do you agree with this statement? Justify
your answer by calculating the elasticity coefficient by aid of the ARC (midpoint)
formula.
8.2.
8.3. The demand for Firm B is said to be elastic. Do you agree with this statement? Justify
your answer by calculating the elasticity coefficient by aid of the ARC (midpoint)
formula.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffc0cda80-4d66-44d5-9867-6cf21955985c%2F773ae8d5-44b8-4b7d-9d32-d72caf9d61f6%2Fr8q26sq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:For scenario 5, answer the following questions:
8.1. The revenue for both firms changed due to an increase in supply. Do you recommend
that both Firm A and Firm B should increase supply to generate higher revenue?
Substantiate your answer by calculating the new revenue for both firms after the supply
increase.
The demand for Firm A is said to be elastic. Do you agree with this statement? Justify
your answer by calculating the elasticity coefficient by aid of the ARC (midpoint)
formula.
8.2.
8.3. The demand for Firm B is said to be elastic. Do you agree with this statement? Justify
your answer by calculating the elasticity coefficient by aid of the ARC (midpoint)
formula.
![Question 8
Read the following scenario and answer the questions that follow.
Scenario 5
The sensitivity of the quantity demanded to a change in the price will depend on the slope of the
demand curve.
Consider the following two firms depicted in the diagram below.
Firm A
Firm B
So
Si
Se
Et
15
E2
Do
Ez
Do
20
30
20 22
The initial price and quantity for both firms are R15 and 20units. The magnitude of the supply increase
for Firm A is equivalent to Firm B. The revenue for both firms before the supply increase equals R300.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffc0cda80-4d66-44d5-9867-6cf21955985c%2F773ae8d5-44b8-4b7d-9d32-d72caf9d61f6%2Fdj649ba_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 8
Read the following scenario and answer the questions that follow.
Scenario 5
The sensitivity of the quantity demanded to a change in the price will depend on the slope of the
demand curve.
Consider the following two firms depicted in the diagram below.
Firm A
Firm B
So
Si
Se
Et
15
E2
Do
Ez
Do
20
30
20 22
The initial price and quantity for both firms are R15 and 20units. The magnitude of the supply increase
for Firm A is equivalent to Firm B. The revenue for both firms before the supply increase equals R300.
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