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- The current price for a good is $25, and 90 units are demanded at that price. The price elasticity of demand for the good is -1.5. When the price of the good drops by 8 percent to $23, consumer surplus by $(Enter your response to the nearest penny) increases decreasesIn a particular market, demand and supply curves are defined by the following equations:QD = 300 – 20P,QS = -540 + 40P,where P is the price per unit in pounds. A) At the equilibrium point, what is the elasticity of demand? B) If the price is £12, what is the elasticity of demand?Problem Number 8 Economics: Elasticity of Demand for DVD Rentals. The demand for DVD rentals at Klix Video is given by q= D(x) = 120 - 20x, where q is the number of DVDs rented per day at x dollars per rental. Find each of the following. a) The elasticity as a function of x b) The elasticity at x = 2 and at x = c) The value of x for which E(x) = 1. Interpret the meaning of this price. d) The total-revenue function, R(x) = (x) D(x) e) The price x at which total revenue is a maximum 4. Interpret the meaning of these values of the elasticity.
- GameZone, a video games store, is considering the best way to price two new games – a first-person shooter (FPS) and a racing game. There are four types of consumers that might buy the games with roughly equal numbers of each type, and their willingness to pay (WTP) for each game is detailed in the table below (assume that the willingness-to-pay for a second game of the same type is zero). How should Gamezone price the two games separately to maximise revenue? How should Gamezone price a bundle of both games to maximise revenue? Is there an alternative (involving bundling) that generates more revenue than either single prices or a bundle alone? Under what condition/s is bundling likely to increase profits for a firm? Consumer Type WTP for FPS game WTP for racing game A $120 $70 B $70 $120 C $160 $10 D $10 $160Name a normal good, an inferior good, a set of substitute goods, a set of complements that are used in your household daily. For the normal good, make a (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your own household. For the same normal good, make another (Hypothetical) linear demand schedule with 7 different price points and corresponding quantity demanded by your neighbor. Assuming that you and your neighbor are the only two households in the market, make a market demand schedule for the same normal good. Draw and interpret a graph to show the market demand and impact of changes in quantity demanded if the price of the same normal good decreases. For the inferior good, draw and interpret a graph showing the demand curve and a shift in the curve if your income increases. For anyone good from the set of substitutes, draw and interpret a graph showing the demand curve and a shift in the curve if the price of the substitute…Jim's Camera shop sells two high-end cameras, the Sky Eagle and Horizon. The demand for these two cameras are as follows (DS = demand for the Sky Eagle, Ps is the selling price of the Sky Eagle, DH is the demand for the Horizon and PH is the selling price of the Horizon): Ds = 230 - 0.5 Ps + 0.38 PH DH = 260 + 0.1 Ps - 0.62 PH The store wishes to determine the selling price that maximizes revenue for these two products. Select the revenue function for these two models. Choose the correct answer below. (i) Ps Ds + PHDH = PH(260 - 0.1 Ps - 0.62 PH) + Ps(230 - 0.5 Ps + 0.38 PH) (ii) Ps Ds - PH DH = Ps(230 - 0.5 Ps + 0.38 PH) - PH(260 - 0.1 Ps - 0.62 PH) (iii) Ps Ds + PH DH = Ps(230 - 0.5 Ps + 0.38 PH) + PH(260 + 0.1 Ps - 0.62 PH) (iv) Ps Ds - PH DH = Ps(230 + 0.5 Ps + 0.38 PH) - PH(260 - 0.1 Ps - 0.62 PH) Answer: Option 3 Find the prices that maximize revenue. Do not round intermediate calculations. If required, round your answers to two decimal places. Optimal Solution:…
- The diagram to the right shows a hypothetical demand curve for apples. The slope of this curve is response rounded to two decimal places. Include minus sign if appropriate.) (Enter your Price (dollars per bushel) 100.00 90.00 80.00- 70.00- 60.00- 50.00 40.00 30.00 20.00- 10.00+ Demand Curve for Apples 0.00 0 10 20 30 40 50 60 70 80 90 100 Quantity (bushels per week)Suppose the demand curve for a product is given by Q=18-1P+2PS where P is the price of the product and Ps is the price of a substitute good. The price of the substitute good is $2.60. Suppose P = $1.00 The price elasticity of demand is (Enter your response rounded to two decimal places.)Joe Smiley buys his mobile phone services from Sprint, the sole provider in his state of Wyoming. Sprint offers the following pricing plans: a fee of 10 dollars per month and 50 minutes of free calls per month or a fee of 20 dollars per month and 100 minutes of free calls. Under both plans the price of additional calls is 25 cents per minute.Joe Smiley's demand curve for mobile phone services is P=100 - 0.5Q where P is measured in cents/minute and Q is measured in minutes per month. a) suppose Joe Smiley subscribes to the first plan (10 dollar fee and 50 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? b) suppose Joe Smiley subscribes to the second plan (20 dollar fee and 100 free minutes) (i) how much calling time would he consume? (ii) what would be his total benefit? What would be his surplus? c) which plan would Joe Smiley choose? He will choose plan (b) because it maximizes his surplus
- Aruna owns Pottery Plus, a small firm that produces terra cotta pots for sale in the Edmonton area. The graph below shows Aruna's demand curve. Price ($) 40 36 32 28 24 20 16 12 8 4 0 4 8 12 16 20 24 28 32 36 40 Quantity per periodQuestions 5-9: Mary owns a cookie shop. One day, she decides to have a customer appreciation day and gives away 12 cookies. She begins to charge later in the evening. If she charges the customer $1, she will sell 9 cookies. If she charges $2, she will only sell 6 cookies. 5. Complete the demand schedule below. P (S) Qd 0 12 $1 9 $2 6 $3 $4 6. What is happening between the price and the number of cookies customers want? As the price increases, the quantity demanded decreases. 7. Draw the demand curve below: Do not forget everything that must be labeled.. P QExplain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.