6. Elasticity and total revenueThe following graph shows the daily demand curve for bikes in Chicago.Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.Note: You will not be graded on any changes made to this graph.120110Total Revenue1009080706040A302010Demand1624324048566472808896QUANTITY (Bikes)PRICE (Dollars per bike)50 On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $20, $30, $40, $50, $60, $70,and $80 per bike.27702580Total Revenue239022002010182016301440125010600.1030405060708090100110120PRICE (Dollars per bike)According to the midpoint method, the price elasticity of demand between points A and B is approximately .Suppose the price of bikes is currently $20 per bike, shown as point B on the initial graph. Because the demand between points A and B isin total revenue per day.a $10-per-bike increase in price will lead toIn general, in order for a price decrease to cause a decrease in total revenue, demand must beTOTAL REVENUE (Dollars)20

Total revenue is the total receipts collected from the sale of the good in the market. The…

Answered: The following graph shows the daily…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Directions: Solve the following problems. Interpret the results. 1. Christine sells banana banana turon for Php 4.00 per piece. She sells 50 pcs, and decides that she can charge more. She raises the price to Php6.00 per piece and sells 40 pieces. What is the elasticity of demand for her banana turon? a) Solution: b) Interpret the result of the demand elasticity:
Consider the following pairs of goods. In each case, which would you expect to have the more elastic demand? Why? a. water or diamonds b. insulin or nasal decongestant spray c. food in general or breakfast cereal d. gasoline over the course of a week or gasoline over the course of a year e. personal computers or IBM personal computers
10. Comics The demand curve for original Iguanawoman comics is given by (400 – p)² (0
QUESTION TWo. Suppose the Daily Graphic Newspaper estimates that if it raises the price of its newspaper from Ghc1.00 to Ghc1.50 then the number of subscribers will fall from 50,000 to 40,000. a. What is the price elasticity of demand for the Daily Newspaper when elasticity is calculated using the midpoint method? b. What is the advantage of using the midpoint method? c. If the Daily Newspaper's only concern is to maximize total revenue, should it raise the price of a newspaper from Ghc1.00 to Ghc1.50? Why or why not? d. Suppose there is an increase in consumers' incomes. In the market for automobiles (a normal good), does this event cause an increase in demand or an increase in quantity demanded? Does this cause an increase in supply or an increase in quantity supplied? (Explain. NB: Explanation must not be more than half a page.) e. Suppose there is an advance in the technology employed to produce automobiles. In the market for automobiles, does this event cause an increase in supply…
2
Suppose that you are the marketing manager of Citruscity, the only producer of grapefruits in the imaginary economy of Blockburg. As a monopolist, Citruscity's objective is to maximize its profit, so it is up to you devise a way to increase profits through price discrimination. As a former economics student, you know that many firms successfully practice price discrimination by separating their market into two identifiable types of consumers-what economists call third-degree price discrimination. Examples of this include student discounts, senior citizen discounts, and ladies' night discounts. After doing some research, you conclude that the demand for grapefruits varies greatly between consumers who clip coupons and those who do not. The following graphs show the overall dailly demand and marginal revenue (MR) for a pound of grapefruits for each group of consumers and the marginal cost (MC) for producing a pound of grapefruits. Assume that fixed costs are equal to zero. Note: You will…
6. Elasticity and total revenue The following graph shows the daily demand curve for bikes in San Francisco. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. *graph 1* On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $30, $45, $60, $75, $90, $105, and $120 per bike. *graph 2* According to the midpoint method, the price elasticity of demand between points A and B is approximately ___ . Suppose the price of bikes is currently $30 per bike, shown as point B on the initial graph. Because the demand between points A and B is ___ , a $15-per-bike increase in price will lead to ___ in total revenue per day. In general, in order for a price decrease to cause a decrease in total revenue, demand must be ____.
8. Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gumdrops, frizzles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gumdrops decreases by 8%, the quantity of frizzles sold decreases by 6% and the quantity of kipples sold increases by 8%. Your job is to use the cross-price elasticity between guppy gumdrops and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…
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Jose owns a donut business in Los Angeles, and he wants to increase his total revenue. He knows that, when donuts are $1, he sells 200 an hour, and when he lowers the price to $0.75, he sells 280 an hour. A) Using the midpoint method, compute the price elasticity of demand for Jose’s donuts. Please show the formula used for understanding. B) Based on (A) is demand for Jose’s donuts elastic or inelastic? How do you know? Explain C) Should he raise or lower the price to generate more revenue.
Suppose the own price elasticity of demand for good X is −2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is −6. Determine how much the consumption of this good will change if:Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (−) sign.a. The price of good X decreases by 5 percent. percentb. The price of good Y increases by 10 percent. percentc. Advertising decreases by 2 percent. percentd. Income increases by 3 percent. percent

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The following graph shows the daily demand curve for bikes in Chicago. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph.