In 1916, Henry Ford was quoted as saying the following: "There are men who will pay $360 for a car who would not pay $440. We had in round numbers 500,000 buyers of cars on the $440 basis, and I figure that on the $360 basis we can increase sales to possibly 800,000 cars for the year - less profit on each car, but more cars, more employment of labor, and in the end we get all the total profit we ought to make." If Ford's estimate as correct, what was the price elasticity of demand for his cars? By how much did total revenue increase? 7 Using the data from question 6, above, write the demand curve equation for Henry Ford's cars. 8 Using the demand curve equation from question 7, build a graphic to sell Ford cars to the public in 1916.
In 1916, Henry Ford was quoted as saying the following: "There are men who will pay $360 for a car who would not pay $440. We had in round numbers 500,000 buyers of cars on the $440 basis, and I figure that on the $360 basis we can increase sales to possibly 800,000 cars for the year - less profit on each car, but more cars, more employment of labor, and in the end we get all the total profit we ought to make." If Ford's estimate as correct, what was the price elasticity of demand for his cars? By how much did total revenue increase? 7 Using the data from question 6, above, write the demand curve equation for Henry Ford's cars. 8 Using the demand curve equation from question 7, build a graphic to sell Ford cars to the public in 1916.
Chapter5: Supply, Demand, And Price: Applications
Section: Chapter Questions
Problem 14QP
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Question
| 6 | In 1916, Henry Ford was quoted as saying the following: | |||||||||
| "There are men who will pay $360 for a car who would not pay $440. We had in round numbers | ||||||||||
| 500,000 buyers of cars on the $440 basis, and I figure that on the $360 basis we can | ||||||||||
| increase sales to possibly 800,000 cars for the year - less profit on each car, but more cars, | ||||||||||
| more employment of labor, and in the end we get all the total profit we ought to make." | ||||||||||
| If Ford's estimate as correct, what was the price |
||||||||||
| By how much did total revenue increase? | ||||||||||
| 7 | Using the data from question 6, above, write the demand curve equation for Henry Ford's | |||||||||
| cars. | ||||||||||
| 8 | Using the demand curve equation from question 7, build a graphic to sell Ford cars to the | |||||||||
| public in 1916. |
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