Given the demand equation Qfollowing table (using Excel):=1,500 200P, calculate all the numbers necessary to fill in theElasticityPQ Point ArcTotalRevenue RevenueMarginal$7.006.506.005.505.004.504.003.503.002.50

Step 1: Compute Q for each PThe demand equation is:Q=1,500−200PFor each price (P), substitute into…

Answered: Given the demand equation Q following…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 2P

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Suppose you could buy shoes one at a time, miter than in pain. What do you predict the cross-price elasticity for left shoes and right shoes would be?
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?
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Can you think of an industry (or product) with near infinite elasticity of supply in the short term? That is, what is an industry that could increase Qs almost without limit in response to an increase in the price?

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Given the demand equation Q following table (using Excel): = 1,500 200P, calculate all the numbers necessary to fill in the Elasticity P Q Point Arc Total Revenue Revenue Marginal $7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50