PNG’s managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5000 and total variable costs are $4000, based on production of 400 units. The following values may be useful. 1n (0.2) = –1.609 1n (1.5) = 0.405 1n (0.5) = –0.693 1n (4000) = 8.294 1n (0.8) = –0.223 1n (5000) = 8.517 What is PNG’s price elasticity of demand? –0.252 +0.322 –3.973 +3.108
PNG’s managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5000 and total variable costs are $4000, based on production of 400 units. The following values may be useful. 1n (0.2) = –1.609 1n (1.5) = 0.405 1n (0.5) = –0.693 1n (4000) = 8.294 1n (0.8) = –0.223 1n (5000) = 8.517 What is PNG’s price elasticity of demand? –0.252 +0.322 –3.973 +3.108
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
PNG’s managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5000 and total variable costs are $4000, based on production of 400 units. The following values may be useful.
1n (0.2) = –1.609 |
1n (1.5) = 0.405 |
1n (0.5) = –0.693 |
1n (4000) = 8.294 |
1n (0.8) = –0.223 |
1n (5000) = 8.517 |
What is PNG’s
- –0.252
- +0.322
- –3.973
- +3.108
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