Question 3A local firm produces three types of pizza, for delivery to homes in the area. The ownershave completed research, to discover the demand curves for each of the three pizzas.The schedules are shown below: (Quantities are per week).PricPizza APizza BPizza Ce(Qd)(Qd)(Qd)12800100118402001088040030099208004008960120050010001600600610402000700510802400800Plot the three demand curves, on one graph.Calculate PED for all three pizzas over theprice increases from £9 to £10. For pizza C only, what price must be charged if the firmwishes to maximize its sales revenue? (Hint: more elastic demand will affect therevenue adversely).Question 4What can you conclude about the price elasticity of demand in each of the followingstatements?a. "The pizza delivery business in this town is very competitive. I'd lose half mycustomers if I raised the price by as little as 10%."b. "I owned both of the two Jerry Garcia autographed lithographs in existence. I sold oneon eBay for a high price. But when I sold the second one, the price dropped by 80%."c. "My economics professor has chosen to use the Krugman/Wells textbook for thisclass. I have no choice but to buy this book." d. "I always spend a total of exactly $10per week on coffee."Question 5Do you think the price elasticity of demand for Ford sport-utility vehicles (SUVS) will increase,decrease, or remain the same when each of the following events occurs? Explain your answer.a. Other car manufacturers, such as General Motors, decide to make and sell SUVS.b. SUVS produced in foreign countries are banned from the American market.c. Due to ad campaigns, Americans believe that SUVS are much safer than ordinary passengercars.d. The time period over which you measure the elasticity lengthens. During that longer time,new models such as four-wheel-drive cargo vans appear. 15:34ExerciseQuestion 1Work out the Price Elasticity of Demand for each, and comment on your result.A. The price of a smartphone is currently £200, and the quantity demanded is4m. Next year the price falls to £180 and the quantity demanded rises to 6m.B. The price of pens today is £1, and the quantity demanded is 1m. Next year theprice rises to £1.10 and the quantity demanded falls to 950,000.C. The price of a daily newspaper today is £1.50p, and the quantity demanded is2m. Next year the price falls by 30p and the quantity demanded rises to 2.2mQuestion 2RCO Manufacturing is an electronics manufacturer and retailer. Its main products areultrabook computers, PCs and calculators. The current price of the ultrabook is £500,the PC is £800 and the calculator is £40. This year the firm sold 10,000 ultrabooks,20,000 PCs and 1 million calculators.In an attempt to improve revenue the managers of the firm have decided to increase allprices by 10%. Market research has suggested that the price elasticity of demand foreach product is:Ultrabook: (-) 1.5;PC: () 2.5;calculator: (-) 0.6You have been asked to evaluate the planned price increases.Comment on the planned price changes.Would a 10% price reduction have been better for some or all of the products?What benefit (if any) would advertising bring to the firm?(You should support any arguments with calculations.)Question 3A local firm produces three types of pizza, for delivery to homes in the area. The ownershave completed research, to discover the demand curves for each of the three pizzas.The schedules are shown below: (Quantities are per week).PricPizza APizza BPizza C(Qd)(Qd)(Qd)1280010011840200108804003009920800400

As there are multiple question asked, we would be answering the first question (1) only. Please…

Question 1 Work out the Price Elasticity of Demand for each, and comment on your result. A. The price of a smartphone is currently £200, and the quantity demanded is 4m. Next year the price falls to £180 and the quantity demanded rises to 6m. B. The price of pens today is £1, and the quantity demanded is 1m. Next year the price rises to £1.10 and the quantity demanded falls to 950,000. C. The price of a daily newspaper today is £1.50p, and the quantity demanded is 2m. Next year the price falls by 30p and the quantity demanded rises to 2.2m

Question 1 Work out the Price Elasticity of Demand for each, and comment on your result. A. The price of a smartphone is currently £200, and the quantity demanded is 4m. Next year the price falls to £180 and the quantity demanded rises to 6m. B. The price of pens today is £1, and the quantity demanded is 1m. Next year the price rises to £1.10 and the quantity demanded falls to 950,000. C. The price of a daily newspaper today is £1.50p, and the quantity demanded is 2m. Next year the price falls by 30p and the quantity demanded rises to 2.2m

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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