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- 1. In 2020 due to state deregulations ride sharing company X managed to lower its price which led to higher quantity demanded of their rides (a movement along the demand curve). The accompanying table describes what happened to prices and the quantity demanded of their service. Using the midpoint method, calculate the price elasticity of demand for the rides. 2008 2012 Quantity demanded (rides) 130 million 420 million Average price (per ride) $25 $15A. Using the mid point equation, calculate the price elasticity of demand for the market demand curve for a change from the equilibrium price of $4.00( show the equation and all calculations) is the demand curve elastic or I elastic for this price change? What would happen to the total market revenue if the price changed to $4.00 b. If a new firm(competitor) enters this market so that 6adsitional units are supplied at each price above $0, what would happen to the equilibrium price and quantity and the total market revenue of the market. Add a new market supply curve to your original graph and indicate the new equilibrium price and quantity on the appropriate axes.1. Jeff Jones at Ice ‘n Carry ('InC') Coolers reduced the price of InC coolers by $10 from the usual $40. Weekly sales increased from 10 to 20 InC Coolers per week. a. What is the arc price elasticity of demand? b. Jeff is considering a further price reduction. What would be the effect of the reduction on revenues? How about profits? Revenues: Profits: Increase/ Decrease / Can't tell Increase/ Decrease / Can't tell
- 1. Online the timing and tailoring of prices to specific models of products is the key to successful pricing in online markets. And “Thanks to the ready availability of data in online markets, a pricing manager can easily approximate the elasticity of demands for the different products it sells online.” Assuming a 10 percent decrease in price increases sales by 28 percent, calculate the price elasticity of demand? If the wholesale price of the online product is $50 and sells at a price comparison site that charges $.50 per click and boasts a conversion rate of 5 percent (an average of 20 clicks are needed to generate a sale). What price should you charge for the product? What is the optimal markup on cost? 2. The authors assert that price sensitivity is affected by (1) product life cycles, and (2) numbers of competitors. In fact, “when the number of competing sellers doubles, a firm’s elasticity of demand is expected to double (and you should be able to verify this through…Suppose that a demand curve is given by 18-3P. What is the elasticity of demand at the point Q - 3 -5 5Which of the following is likely to have the highest (in absolute value) demand elasticity? A.Cigarettes b.A necessary medication without close substitutes c.Camel brand cigarettes
- 1. Suppose you are given the following information about the demand for vinyl records: P = 60 – 1.5QD a) Suppose the price increases from $15 to $30, what is the arc elasticity of demand? b) Suppose the price decreases from $30 to $ 15, what is the arc elasticity of demand? c) How does you answer from part (a) and (b) compare with the point elasticity of demand when price is $15? What about when price is $30?The market for Harvard hoodies in the campus store is in equilibrium. They currently sell 25 hoodies in a week at a price of $50 per hoodie 1. What is the current revenue? 2 if they decrease the price of the hoodies from $50 to $40 the quantity demanded would increase from 25 to 40 hoodies A. What is the new revenue B. Calculate the price of the elasticity of the hoodie demand at these changes in price and quantity. 3. Assuming the same elasticity of demand as you just calculated if they instead increase the price from $50 to $ 75 A. What would be the new quantity demanded B. What would be the new revenueWhich of the following is likely to have the most price elastic demand? a. laptop computers Ob. tablets c. Microsoft Surface tablets d. cell phones
- Donna Mia's is currently selling their dinner specials for $15.00 each. The restaurant is thinking about increasing that price by $3.00. They hired an economist to figure out how that would affect total revenue which is currently one hundred and fifty-six thousand dollars a month. The economist estimated that total revenue would fall by about 4.5percent. I A. What is the price elasticity of demand over the relevant range? B. How many dinners will be sold at the new price? C. Explain why this would/would not be a good idea. You must use the elasticity coefficient (explain what the number means), total revenue, and what you know about price elasticity of demand to support your answer. D. Graph this problem.99257#/9999257/10/-1 Macmillan Learning $1.50 Stacked 3 4 --$1:50- Quantity 33.2 vered by desmas Quantity Alter the graph in order to explore the change in total revenue in response to a price change with different demand elasticities. Notice that once price goes below $1.50, total revenue decreases in both cases of demand elasticity. a. What important insights does this illustrate? Elasticity measures responsiveness in percent change, which is different than slope. Elasticity is unitary along a linear demand curve. Elasticity is constant along a linear demand curve. With linear demand curves, elasticity will eventually change as you move along a curve. b. What can be inferred about the elasticity of both curves once price goes below $1.50? O Demand is elastic for the steeper curve and inelastic for the flatter curve. O Demand is elastic for both curves once price drops below $1.50. There is not enough information to make a determination. O Demand is inelastic for both curves once…QUESTIONS: Why do high-end hotels charge for Wi-Fi connections while lower-end hotels do not? What is the relationship between the price elasticity of demand for a hotel and whether it charges for Wi-Fi? ii. What is "add-on pricing"? Is an add-on price posted like a hotel rate is posted? Is Wi Fi upcharge an example of add-on pricing? Is free Wi-Fi at high-end hotels an effective loyalty inducement?