Which of the following products comes closest to having a perfectly price inelastic demand? O A. iPhones O B. bus rides OC. cholesterol medication in general O D. gasoline
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- Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose from $95 to $105, what would be the elasticity of supply if the quantity supplied changed from a. 38 to 42? b. 78 to 82? c. 54 to 66?What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens lo the measured elasticity? How would you explain that?The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
- What would the gasoline price elasticity of supply mean to UPS or FedEx?Suppose you could buy shoes one at a time, miter than in pain. What do you predict the cross-price elasticity for left shoes and right shoes would be?What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?
- Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.Maria has decided always to spend one third of her income on clothing. a. What is her income elasticity of clothing demand? b. What is her price elasticity of clothing demand? c. It Marias tastes change and she decides to spend only one fourth of her income on clothing, how does her demand curve change? What is her income elasticity and price elasticity now?While analyzing the semiconductor industry you notice that when the price of ultrapure water rises 2%, the demand for chip grade silicon declines 8%. From this data what appears to be true? O A Chip grade silicon is a substitute to Ultrapure water with a cross-price elasticity of +4. O B. Chip grade silicon is a complement to Ultrapure water with a cross-price elasticity of +0.25 O C. Chip grade silicon is a complement to Ultrapure water with a cross-price elasticity of-4. O D. Chip grade silicon is a substitute to Ultrapure water with a cross-price elasticity of -0.25
- Which of the following is not a type of elasticity of demand? O a. Cost elasticity of demand O b. Price elasticity of demand O c. Income elasticity of demand O d. Cross elasticity of demandPrice Elasticity for Beef is GIVEN THIS ELASTICITY MATRIX Beef Demand Reponse % Pork ооооо Chicken Select one: O a. 063 O b. -852 Beef -0.852 0.109 0.183 Oc. -.955 d. 103 e. None of the above (1% change in price) Pork 0.063 -0.955 0.103 Chicken 0.0345 0.031 -0.564 Income 0.506 0.132 0.149The income elasticity of demand for a perfume is 0.5 Which of the following is the correct interpretation O a. A 1 percent increase in income will result in 2 percent rise in its demand O b. A2 percent increase in income will result in 1 percent fall in its demand C. A 50 percent increase in income will result in 1 percent rise in its demand O d. A 2 percent increase in income will result in 1 percent rise in its demand
