Answered: If the price of petrol increases from…

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

If the price of petrol increases from 70 cents to 77 cents per litre, and as a result
the quantity demanded decreases from 1000 to 995 litres, calculate the price
elasticity of demand.

2. If the original price and quantity demand are $0.50 and 50 respectively, and
there is an increase in price to $0.55, and quantity demanded falls to 10,
calculate the price elasticity of demand.

3. An individual has allocated income so as to maximise total utility and has
marginal utility of coffee (per cup per week) that is four times that of tea (per
cup per week) but only a quarter of that of pepperoni pizza. If a pepperoni
pizza is $16, You are required to calculate
a) Price of coffee per cup.

b) Price of tea per cup.

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