Answered: sense 2. Calculate the price elasticity…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How would I find the amounts to plug into the midpoint formula when only the percent change is given? Not graded it’s just a review for a quiz tomorrow

Transcribed Image Text:**Educational Website Content: Price Elasticity of Demand** **1. Analyze Elasticity with Defined Price Range:** - **b. Elasticity Assessment:** Is the demand elastic or inelastic within this range? - **c. Revenue Impact:** What is the change in total revenue? Does this make sense? **2. Calculate Price Elasticity of Demand:** Determine if the demand is price elastic, inelastic, or unit elastic for the following products: - **a. Sugar Market:** Raw sugar prices rose by 3%, and raw sugar consumption declined by 2%. - **b. Cigarette Impact:** A 10% increase in the price of cigarettes reduces smoking by 10%. - **c. Luxury Cars:** The price of luxury cars increases by 5% while the quantity demanded decreases by 8%. **3. Case Study: Running Shoes Demand Curve** A sporting goods store has estimated the demand curve for a popular brand of running shoes as a function of price. Use the diagram to answer the questions that follow. **Diagram Explanation:** The graph illustrates the demand curve for running shoes with the following elements: - **Y-axis:** Price per pair ($) - **X-axis:** Shoe sales per week - Points marked on the demand curve (A to F) show different combinations of prices and corresponding sales: - **Point A:** $70, 100 pairs - **Point B:** $60, 200 pairs - **Point C:** $50, 300 pairs - **Point D:** $40, 400 pairs - **Point E:** $30, 500 pairs - **Point F:** $20, 600 pairs **Tasks:** - **a. Elasticity Calculation:** Use the midpoint formula to calculate the price elasticity of demand between points A and B.

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