Calculating Price Elasticity The CorvetteWhen the C8 Corvette first arrived back in June of 2019, the world was shocked to seethe mid-engine sports car carry an MSRP under $60,000. And while Chevrolet was more thanhappy to get that price into the headlines, it didn't stay set in place for very long. We've alreadyseen the automaker adjust C8 pricing in the past, but now thanks to the folks atCorvetteBlogger, we have yet another significant Corvette price increase to report.According to the report, the base price of every 2023 C8 Corvette Stingray hasincreased by $2300 as of June 13, regardless of which trim level your build may be. That meansa base 1LT coupe increased from $63,295 to $65,595 including destination charges. Anentry-level droptop starts at a relatively pricey increased from $70,795 to $73,095 after theadjustments. GM hasn't been too specific about the reason behind this price increase, but thecurrent economic situation seems a likely culprit.Chevrolet had the following to say when pressed about the price increase:"The MSRP of the 2023 Corvette Stingray coupe and convertible has increased effective June13," Senior Communications Manager Trevor Thompkins told Road & Track viaemail. "Customers with sold orders submitted prior to when the price increase becameeffective will not be impacted by the change. We monitor and adjust pricing on all our productsregularly, and we're confident the Corvette remains a winning formula of performance andattainability."Chevrolet, in another statement, made it clear that the price increases did not have a bigimpact on their sales. "We aren't seeing customers shying away from our cars. Orders are downa little, maybe 3% on the 1LTs but only 1% on the convertibles. Customers know quality whenthey see it!"a. Calculate the price elasticity of demand (before the price increase) for the 1LT andtheconvertible model.b. Identify the elasticity and weather the Corvettes are elastic, inelastic, or elastic.c. If you were an economist for Chevrolet (the maker of the car), what would yourpolicy recommendation be? Explain your policy and WHY you believe this is theappropriate policy.

Price elasticity of demand refers to the percentage change in quantity demanded with respect to…

The Corvette When the C8 Corvette first arrived back in June of 2019, the world was shocked to see the mid-engine sports car carry an MSRP under $60,000. And while Chevrolet was more than happy to get that price into the headlines, it didn't stay set in place for very long. We've already seen the automaker adjust C8 pricing in the past, but now thanks to the folks at CorvetteBlogger, we have yet another significant Corvette price increase to report. According to the report the base price of overy 2023 C8 Corvette Stingray has

The Corvette When the C8 Corvette first arrived back in June of 2019, the world was shocked to see the mid-engine sports car carry an MSRP under $60,000. And while Chevrolet was more than happy to get that price into the headlines, it didn't stay set in place for very long. We've already seen the automaker adjust C8 pricing in the past, but now thanks to the folks at CorvetteBlogger, we have yet another significant Corvette price increase to report. According to the report the base price of overy 2023 C8 Corvette Stingray has

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 3TY

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Say in a market we haveDemand is P = 5 – 0.005QSupply is P = 0.00125Qa-you will have a graph with price on the vertical axis and quantity on the horizontal axis formost parts of this problem. You will want to show intercept values and equilibrium values withthe specific values from the problem (when you graph the supply show it go out at least to thesame level of Q as the Q intercept for the demand curve).b-what are the equilibrium price and quantity traded in the market?c-say the government levies an excise tax in the market of 50 cents that renders the supply tonow be P = .00125Q + 0.5 (essentially the supply curve shifts up by 50 cents at each quantity).What are the new equilibrium price and quantity traded in the market with this excise tax?d-did the market price increase by as much as the 50 cent tax? (compare the market priceincrease with the amount of the tax of 50 cents)e-what is then loss in consumer surplus from the tax? Do consumers like excise taxes?f-what is the elasticity…
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Creative Homework/Short Project Assume that you arean entrepreneur who runs a bakery that sells glutenfree breads and cakes. You believe that the currenteconomic conditions merit an increase in the price ofyour baked goods. You are concerned, however, thatincreasing the price might not be profitable becauseyou are unsure of the price elasticity of demand for yourproducts. Develop a plan for the measurement of priceelasticity of demand for your products. What findingswould lead you to increase the price? What findingswould cause you to rethink the decision to increaseprices? Develop a presentation for your class outlining(1) the concept of elasticity of demand, (2) why raisingprices without understanding the elasticity would bea bad move, (3) your recommendations for measurement, and (4) the potential impact on profits for elasticand inelastic demand
Creative Homework/Short Project Assume that you arean entrepreneur who runs a bakery that sells glutenfree breads and cakes. You believe that the currenteconomic conditions merit an increase in the price ofyour baked goods. You are concerned. however, thatincreasing the price might not be profitable becauseyou are unsure of the price elasticity of demand for yourproducts. Develop a plan for the measurement of priceelasticity of demand for your products. What findingswould lead you to increase the price? What findingswould cause you to rethink the decision to increaseprices? Develop a presentation for your class outlining(I) the concept of elasticity of demand, (2) why raisingprices without undetstanding the elasticity would bea bad move. (3) your recommendations for measurement. and (4) the potential impact on profits for elasticand inelastic demand
What are the likely consequences on the U.S. market for tobacco products for each of the events listedbelow? Which curve shifts, supply or demand?Please indicate the direction of shift. State whetherthe equilibrium price and quantity would increase,decrease, or stay the same. Show the changes usinga standard diagram with an upward-sloping supplycurve and a downward-sloping demand curve.a. The Food and Drug Administration classifiestobacco as an “addictive substance.”b. The Congress votes to raise the excise tax on alltobacco products.c. Hurricane Fran dumps 15 inches of rain onNorth Carolina and destroys 80 percent of thatstate’s tobacco crop.d. Sixteen states sue the major tobacco companiesfor billions of dollars because of tobacco-relatedcosts in their Medicaid programs.e. Medical evidence that more than two cups ofcoffee a day, considered by many to be a substitute for smoking, greatly increases the risk ofstomach cancer
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At many municipal golf courses, local residents pay a lower fee to play than other golfers do. One necessary condition for the golf course to be able to successfully price discriminate according to residency is that A. they can check the identification cards of golfers to determine residency. endroite tod B. local resident golfers and other golfers have the same price elasticity of demand to play at the to cad aluen air.com 0. A ...8 851 0 municipal course. C. there are many golf courses nearby from which golfers can choose. D. they require all golfers to rent a cart.