Use the graph to the right for Yolanda's Frozen Yogurt Stand to answer the questions that follow. Use the midpoint formula to calculate the price elasticity of demand for D, between point A and point C and the price elasticity of demand for D₂ between point A and point B. Price elasticity of demand for D₁ = (Round your response to two decimal places. Be sure to include the minus sign as needed.) Price elasticity of demand for D₂ = (Round your response to two decimal places. Be sure to include the minus sign as needed.) Which curve is more elastic? Suppose Yolanda is initially selling 100 cones per day at a price of $2.50 per cone. If she changes her price to $1.50 per cone and her demand curve is D,, what will be the change in her revenue? $(Round your response to two decimal places. Be sure to include the minus sign as needed.) What will be the change in her revenue if her demand curve is D₂? (Round your response to two decimal places as needed.) 4.00 3.75- 3.50- 3.25- 3.00- 2.75-P₁ 1 2.50- 225 2.00 1.75 P2 1.50 1.25- 1.00 0.75- 0.50- 0.25- 0.00+ 0.0 125 175 50.0 100.0 150.0 200.0 Quantity (cones per day) 250.0 o o Q

Use the graph to the right for Yolanda's Frozen Yogurt Stand to answer the questions that follow. Use the midpoint formula to calculate the price elasticity of demand for D, between point A and point C and the price elasticity of demand for D₂ between point A and point B. Price elasticity of demand for D₁ = (Round your response to two decimal places. Be sure to include the minus sign as needed.) Price elasticity of demand for D₂ = (Round your response to two decimal places. Be sure to include the minus sign as needed.) Which curve is more elastic? Suppose Yolanda is initially selling 100 cones per day at a price of $2.50 per cone. If she changes her price to $1.50 per cone and her demand curve is D,, what will be the change in her revenue? $(Round your response to two decimal places. Be sure to include the minus sign as needed.) What will be the change in her revenue if her demand curve is D₂? (Round your response to two decimal places as needed.) 4.00 3.75- 3.50- 3.25- 3.00- 2.75-P₁ 1 2.50- 225 2.00 1.75 P2 1.50 1.25- 1.00 0.75- 0.50- 0.25- 0.00+ 0.0 125 175 50.0 100.0 150.0 200.0 Quantity (cones per day) 250.0 o o Q

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.55. Which of the following events is consistent with a 20 percent decrease in the quantity of the good demanded? a. An increase of 11.0 percent in the price of the good b. an increase of 36.36 percent in the price of the good c. An increase in the price of the good from $11.00 to $20.00 d. an Increase in the price of the good from $20 to $31.00
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