Answered: inelastic

Business

Economics

inelastic

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 2SQP

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Question 4 If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the elasticity of demand for labor is: 50. 0.5. 2. 10.
Imagine you are a bank manager. Currently, your bank holds $8 million in deposits at a 4% interest rate. However, you need to increase the total deposits to $10 million. The interest rate elasticity of savings is 40. What interest rate should you offer to depositors to obtain the required amount, all other things being equal?
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Deborah is a stay-at-home parent who lives in San Francisco and does some consulting work for extra cash. At a wage of $20 per hour, she is willing to work 2 hours per week. At $35 per hour, she is willing to work 11 hours per week.Using the midpoint method, calculate elasticity of Deborah's labor supply.
Charles is a volunteer fire fighter living in San Diego who coaches youth soccer to supplement their normal income. At an hourly wage rate of $40, they are willing to coach 6 hours per week. Upping the wage to $55 per hour, they are willing to coach 8 hours per week. Using the midpoint method, the elasticity of Charles’s labor supply between the wages of $40 and $55 per hour is approximately , which means that Charles’s supply of labor over this wage range is .
2) The demand for a university degree is characterised by the following relationship between the cost of a degree, p, and the quantity demanded, q, b = Aq-1/0 where A and o are positive parameters. a)Find an expression for the price elasticity of demand. b)The fee for a degree was 9,000 in August 2019. In August 2021, the fee had increased by 10% and the demand had decreased by 20%. Does it help you in finding the value of o? c)In practice, the previous experiment may not be suitable to estimate o, i.e., the model may not capture the complexities of the real World. Would you have an intuition as to why?
Calculating the price elasticity of supply Janet is a graduate student living in San Francisco who works as a caddy to supplement their normal income. At an hourly wage rate of $40, they are willing to caddy 9 hours per week. Upping the wage to $55 per hour, they are willing to caddy 17 hours per week. Using the midpoint method, the elasticity of Janet’s labor supply between the wages of $40 and $55 per hour is approximately , which means that Janet’s supply of labor over this wage range is .
Calculating the price elasticity of supply Andrew is a retired teacher who lives in San Diego and does some consulting work for extra cash. At a wage of $25 per hour, he is willing to work 6 hours per week. At $35 per hour, he is willing to work 16 hours per week. Using the midpoint method, the elasticity of Andrew’s labor supply between the wages of $25 and $35 per hour is approximately , which means that Andrew’s supply of labor over this wage range is .
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Beginning with the Fall 2018 semester, three North Carolina universities (UNC Pembroke, Western Carolina University, and Elizabeth City State University) reduced their tuition. After the Fall semester had begun, each of these universities announced that they had experienced a large increase in enrollment. Explain what these facts tell us about the price elasticity of demand for education at these universities. Use your answer to part a. of this question to explain whether reducing tuition would lead to an increase, a decrease, or no change in the amount of revenue received by the universities.
11. Calculating the price elasticity of supply Hubert is a retired teacher who lives in San Diego and teaches tennis lessons for extra cash. At a wage of $30 per hour, he is willing to teach 6 hours per week. At $50 per hour, he is willing to teach 16 hours per week. Using the midpoint method, the elasticity of Hubert’s labor supply between the wages of $30 and $50 per hour is approximately , which means that Hubert’s supply of labor over this wage range is .
Explain the economic concept of elasticity. Apply it to at least one real-world example in detail.