Answered: Economics Question

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Compute the elasticity values. State the degree of elasticity and the
nature of the goods.
1. An increase in the price of Good Y from $5.00 to $6.00 causes
the demand for Good X to decrease from 1000 units to 700
units.
2. An increase in income from $3000 to $4000 causes the demand
for chicken to increase from 6 to 7 kilos.
3. The equation for a demand curve is P = 48 – 3Q. What is the
elasticity in moving from a quantity of 5 to a quantity of 6?
4. The equation for a supply curve is P = 3Q – 8. What is the
elasticity in moving from a price of 4 to a price of 7?

SHARE JOY
NOV 13-17, 2-5PM
Buy one holiday drink, get one free to share
When Starbucks runs a buy one get one free promotion, they effectively lower
the price of a drink by 50%. The company sells more drinks, but at a lower price.
Elasticity determines whether or not this promotion will be profitable. How?
Explain in your own words.

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