Suppose that Acme medicine is currently selling a diabetes medicine for $200. They know their product is very inelastic since it is a necessity tor those that need the drug. Themarketing department determines the product has an elasticity of 0.15. Suppose next period Acme decides to increase the price of their diabetes medicine by 5% and there are nochanges in consumers' income, nor changes in the prices of related products. Acme can expect the quantity demanded for their diabetes medicine to decline byPlease round to two decimal places.

Here, it is given that the price elasticity of demand for Acme medicine is 0.15.

Answered: Suppose that Acme medicine is currently…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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According to the U.S. Department of Energy, the average price of gasoline in the U.S. fell by 14% in 2015. The number of hybrid electric vehicles (HEV) sold in the U.S. fell by 36% in the same year. Calculate the cross-price elasticity of demand for HEVs and gasoline. Round answer to one place after the decimal.
Suppose that consumers experience a 5 percent increase in income and purchase walking shoes increase by 6 percent. What is the income elasticity for walking shoes? (Give your answer to one decimal place.)
1)If there is an increase in the price of tea by 10%. and the quantity demanded coffee increases by 2%, then find the cross elasticity of demand. 2) According to a Honda press release on October 23, 2006, sales of the fuel-efficient four-cylinder Honda Civic rose by 7.1% from 2005 to 2006. Over the same period, according to data from the U.S. Energy Information Administration, the average price of regular gasoline rose from $2.27 per gallon to $2.57 per gallon. Using the midpoint method, calculate the cross-price elasticity of demand between Honda Civics and regular gasoline. According to your estimate of the cross-price elasticity, are the two goods complements or substitutes? (answer on the basis of data value)
Suppose that a consumer's annual demand for office visits is described by the equation Q = 8 -0.1p. If office visits cost $30, and the consumer has no health insurance (i.e., the consumer pays full price), how many office visits will she make? What is the price elasticity of demand for office visits at this point? Suppose a health insurance plan is instituted that pays for one-third of each office visit. How would this affect the quantity and the demand elasticity at the new equilibrium?
What does an income elasticity of demand of 1.33 mean?
Suppose a study suggests that the income elasticity of demand for canned beans is 0.3. Based on this information, you can conclude that canned beans are _____.
Suppose a low-income family that earns K750 per month consumes 8 Kgs of Hamburgers and 2 Kgs of Beef in Month 1. However, in month 2 when the income of the family rises to K950, the quantity of Hamburgers consumed by the family reduces to 5 Kgs while the quantity of Beef increases to 4Kgs. What is the income elasticity of demand for hamburger? What is the income elasticity of demand for steak?
At Webs-R-Us, a website design company, the new manager has decided to increase the price of Webs-R-Us services by 45%. She estimates that the price elasticity of demand for Webs-R-Us is −0.70. The manager expects the number of websites designed to decrease by?
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Calculate the Elasticity Coefficient for the following scenario. Patty bakes pies, she sells them for $10 each and sells about 55 pies per week. But the price of her ingredients increased so she' s contemplating a price increase. She will raise the price to $12 and she estimates her demand will fall to 50 pies per week. Calculate the elasticity coefficient for Patty's Pies. Are Patty's Pies elastic or inelastic? Should she raise her prices? Or keep them the same? You should be able to show your work.
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Rogers purchased 60 tins of paracetamol at shs. 12,500 each from Abacus Pharma. Two months later the cost of a paracetamol tin increased by 35% and Tom Purchased 25 tins of paracetamol. Illustrate the above information on a graph. Calculate the price elasticity of demand and interpret your result (9 marks). Mention the demand and supply shifters of healthcare services other than price .

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