A local firm produces three types of Pizza, for delivery to homes in the area. The owner has completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: (Quantities are per week). Price Pizza A (Qd) Pizza B (Qd) Pizza C (Qd) 12 800 0 100 11 840 0 200 10 880 400 300 9 920 800 400 8 960 1200 500 7 1000 1600 600 6 1040 2000 700 5 1080 2400 800 Plot the three demand curves, on one graph. (It does not have to be Excel). Calculate PED for all three pizzas over the price range $9 to $10. Use the midpoint formula (see your class lecture notes.) Explain why the three PED measures are different. What change would make all three PED measures become more elastic? What about more inelastic?
A local firm produces three types of Pizza, for delivery to homes in the area. The owner has completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: (Quantities are per week). Price Pizza A (Qd) Pizza B (Qd) Pizza C (Qd) 12 800 0 100 11 840 0 200 10 880 400 300 9 920 800 400 8 960 1200 500 7 1000 1600 600 6 1040 2000 700 5 1080 2400 800 Plot the three demand curves, on one graph. (It does not have to be Excel). Calculate PED for all three pizzas over the price range $9 to $10. Use the midpoint formula (see your class lecture notes.) Explain why the three PED measures are different. What change would make all three PED measures become more elastic? What about more inelastic?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A local firm produces three types of Pizza, for delivery to homes in the area. The owner has completed research, to discover the demand
|
|
Pizza A (Qd) |
Pizza B (Qd) |
Pizza C (Qd) |
|
12 |
800 |
0 |
100 |
|
11 |
840 |
0 |
200 |
|
10 |
880 |
400 |
300 |
|
9 |
920 |
800 |
400 |
|
8 |
960 |
1200 |
500 |
|
7 |
1000 |
1600 |
600 |
|
6 |
1040 |
2000 |
700 |
|
5 |
1080 |
2400 |
800 |
Plot the three demand curves, on one graph. (It does not have to be Excel).
- Calculate
PED for all three pizzas over the price range $9 to $10. Use the midpoint formula (see your class lecture notes.)
- Explain why the three PED measures are different. What change would make all three PED measures become more elastic? What about more inelastic?
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