ast week, the price of envelopes was Php 150 a box, and Julie was willing to buy 10 boxes. Today, the price has gone up to Php 175 a box, and Julie is now willing to buy 8 boxes. What is Julie's elasticity of demand? Is Julie's demand for envelopes elastic or inelastic?

ast week, the price of envelopes was Php 150 a box, and Julie was willing to buy 10 boxes. Today, the price has gone up to Php 175 a box, and Julie is now willing to buy 8 boxes. What is Julie's elasticity of demand? Is Julie's demand for envelopes elastic or inelastic?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 7PA: Maria has decided always to spend one third of her income on clothing. a. What is her income...

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Maria has decided always to spend one third of her income on clothing. a. What is her income elasticity of clothing demand? b. What is her price elasticity of clothing demand? c. It Marias tastes change and she decides to spend only one fourth of her income on clothing, how does her demand curve change? What is her income elasticity and price elasticity now?
Isabella always spends $50 on red roses each month and simply adjusts the quantity she purchases as the price changes. What can you say about Isabella's elasticity of demand for roses?
Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?
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.
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
Suppose that your demand schedule for pizza is as follows: a. Use the midpoint method to calculate your price elasticity of demand as the price of pizza increases from 8 to 10 if (i) your income is 20,000 and (ii) your income is 24,000. b. Calculate your income elasticity of demand as your income increases from 20,000 to 24,000 if (i) the price is 12 and (ii) the price is 16.
(Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of demand measures, for a given price, the __________ in quantity demanded divided by the __________ income from which it resulted. b. If a decrease in the price of one good causes a decrease in demand for another good, the two goods are __________. c. If the value of the cross-price elasticity of demand between two goods is approximately zero, they are considered __________.
If the elasticity of demand for hamburgers equals 21.5 and the quantity demanded equals 40,000, predict what will happen to the quantity demanded of hamburgers when the price increases by 10 percent. If the price falls by 5 percent, what will happen?
Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000) Quantity Demanded (income = 12,000) 8 40 DVDs 50 DVDs 10 32 45 12 24 30 14 16 20 16 8 12 a. Use the midpoint method to calculate your price elasticity of demand as the price of DVDs increases from 8 to 10 if (i) your income is 10,000 and (ii) your income is 12,000. b. Calculate your income elasticity of demand as your income increases from 10,000 to 12,000 if (i) the price is 12 and (ii) the price is 16.
Jane thinks that two 6-ounce cans of beer are exactly as good as one 12-ounce can of beer. Suppose that these are the only sizes of beer available to her and that she has $30 to spend on beer. Suppose that an 6-ounce beer costs $0.5 and a 12-ounce beer costs $2. What is her demand for 12-ounce beer?
Nadia consumes two goods, food and clothing. The price of food is $2, the price of clothing is $5, andher income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price offood, the price of clothing, or her income.a. What is her price elasticity of demand for food?b. What is her cross-price elasticity of demand for food with respect to the price of clothing?c. What is her income elasticity of demand for food?
Nadia consumes two goods, food and clothing. The price of food is $2, the price of clothing is $5, and her income is $1,000. She always spends 40% of her income on food regardless of the price of food, clothing, or her income. What is her price elasticity of demand for food? What is her cross-price elasticity of demand for food with respect to clothing? What is her income elasticity of demand for food?