A study of the consumption of beverages in Mexico found that: "Overall, for soft drinks a 10% price increase decreases the quantity consumed by 10.6%."Source: M.A. Colchero, et al., "Price Elasticity of the Demand for Sugar Sweetened Beverages and Soft Drinks in Mexico," Economics and Human Biology, Vol. 19,December 2015, pp. 129-137.Given this information, the price elasticity of demand for soda in Mexico isentering a negative number.)(Enter your response rounded to two decimal places. Use a negative sign if you areIs demand price elastic or price inelastic? Briefly explain.O A. Inelastic, because the percentage change in quantity demanded is less than the percentage change in price.O B. Inelastic, because the percentage change in quantity demanded is greater than the percentage change in price.O C. Elastic, because the percentage change in quantity demanded is less than the percentage change in price.O D. Elastic, because the percentage change in quantity demanded is greater than the percentage change in price.

In a market, the price elasticity of demand is used by the researchers to analyze the consumers'…

Answered: A study of the consumption of beverages…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following passage from the article. According to studies cited by the American Cancer Society, the most surefire way to get people to quit, especially youths, is to raise prices. A 10 percent increase, for example, is followed by a 6.5 percent reduction in the number of cigarette-smoking youths and a 2 percent reduction of the habit in adults. According to the article: demand for cigarettes is elastic for both youths and adults demand for cigarettes is less elastic among youths than adults. demand for cigarettes is more elastic among youths than adults. demand for cigarettes is inelastic for both youths and adults
A recent report by the Centers for Disease Control looked at the relationship between the price of beer and the incidence of new cases of STD's. The report concluded that a beer tax increase of $.20 could reduce overall STD rates by 8.9%. Assume that a six pack cost $5.90 before the price increase. Calculate the cross price elasticity between beer and STD's. What is the sign of this cross-price elasticity? According to your estimate, are beer and STD's compliments or substitutes? Does your answer make sense? Explain.
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.
Homework (Ch 05) 80, 2 Demand 10 20 30 40 50 60 70 90 100 QUANTITY (Thousands of pounds of tomatoes) According to the midpoint method, the price elasticity of demand for tomatoes between point X and point Y is approximately which suggests that the demand for tomatoes is between points X and Y. RICE (Dollars per pound)
4-6 Suppose that the price of croissants rises from $2 to $3 per unit. Use the mid-point approach to get the elasticity. answer the following The quantity of orange juice purchased falls from 10 million bottles to 5 million bottles. What is the cross-price elasticity of demand between croissants and orange juice? Are they complements or substitutes? The quantity of jelly purchased increases from 10 million jars to 20 million jars. What is What is the cross-price elasticity of demand between croissants and jelly? Are they complements or substitutes?
4-6 Suppose that the price of croissants rises from $2 to $3 per unit. Use the mid-point approach to get the elasticity. The quantity of orange juice purchased falls from 10 million bottles to 5 million bottles. What is the cross-price elasticity of demand between croissants and orange juice? Are they complements or substitutes? The quantity of jelly purchased increases from 10 million jars to 20 million jars. What is What is the cross-price elasticity of demand between croissants and orange juice? Are they complements or substitutes?
In a study of the demand for automobiles in Canada, economists Blomqvist and Hassel distinguished between large and small cars and estimated the price and cross- price elasticities as well as the effects of the price of gasoline on the demands for small and large cars. Their results were as follows: a. C. New large cars New small cars d. Own price elasticity 1.26 2.30 Cross price elasticity 0.86 1.73 Elasticity with respect to gasoline price Note: The cross-price elasticities show that the demand for new small cars is more responsive to changes in the price of new large cars than the demand for new large cars is to changes in the price of new small cars. Do the cross-price elasticities have the expected sign? Briefly explain. b. If the price of new small cars went up by, say, 5 percent, by what percentage would new small car purchases change? {Note: In your answer to this and all of the remaining parts of this question, please indicate whether the change is an increase or a decrease.}…
If a complementary price of an item increases and I know the cross-price elasticity, how do I calculate sales of a item?
Suppose the income elasticity of demand for food is 0.45 and the price elasticity of demand is - 1.00. Suppose also that Felicia spends $10,000 a year on food, the price of food is $2, and that her income is $25,000. If a sales tax on food caused the price of food to increase to $2.50, what would happen to her consumption of food? Because a large price change is involved, use the arc elasticity to measure the price elasticity of demand rather than a point elasticity. Felicia's consumption of food would decrease by 1000.00 units. (Enter your response rounded to two decimal places.) Suppose that Felicia gets a tax rebate of $2,500 to ease the effect of the sales tax. What would her consumption of food be now? (Again, use an arc income elasticity to answer this question instead of a point income elasticity.) Felicia's consumption of food would now be 4,175.18 units. (Enter your response rounded to two decimal places.) Is she better or worse off when given a rebate equal to the sales tax…
The following table below shows the information on price, quantity of goods and income level. PRICE OF GOOD A QUANTITY GOOD A GOOD B GOOD C 20 150 80 40 30 100 50 70 Based on the information above, a) Calculate the price elasticity of demand for good A when the price increases from RM 20 to RM 30. b) Calculate the cross-price elasticity of demand for good A and Good B when price increases from RM 20 to RM 30. State the relationship between good A and Good B and give an example of good that has the same relationship with A and good B. c) Calculate the cross-price elasticity of demand for good A and good C when price increases from RM 20 to RM 30. State the relationship between good A and good C and provide an example of good that has the same relationship with A and good C.
QUESTION 1 Encyclopedias were widely used back in the 1970s. Most students and scholars used the encyclopedia to find information on various topics. There was only a small percentage decrease in quantity demanded for encyclopedias in the 1970s when there was a relatively larger percentage increase in price. Today, in the age of the internet, a small percentage increase in price of encyclopedias results in a relatively larger percentage decrease in the quantity demanded. 1. The price elasticiy of demand for encyclopedias in the 1970s was relatively less elastic than today. 2. If the price for encyclopedias increased in the 1970s, the point price elasticity of demand for encyclopedias woud have been greater than 1. 3. The price elasticity of demand for encyclopedias, after the internet, is considered elastic. Which of the above statements are true? O Only 1 is true. O Only 2 is true. Only 3 is true. Both 1 and 2 are true. Both 1 and 3 are true.
The price of gasoline is usually a lot higher at gas stations located very close to a highway than in towns located a few miles away. List two reasons (determinants of elasticity) that explain this:

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