You own a hot dog stand that you set up outside the student union every day at lunch time. Currently, you are selling hot dogs for a price of $3, and you sell 30 hot dogs a day (point A on the diagram). You are considering cutting the price to $2. The graph shows two possible increases in the quantity sold as a result of your price cut. Use the information in the graph (new quantities are given on the horizontal axis) to calculate the price elasticity between these two prices on each of the demand curves. Use the midpoint formula to calculate the price elasticities. On the demand curve containing the points "A" and "B", the price elasticity of demand for a price cut from $3 to $2 is -0.25. (Hint: Include the negative sign and enter your response rounded to two decimal places.) סי Price (dollars per hot dog) 30 37 C D₁ Quantity (hot dogs per day) 71 B D 4 De 3

You own a hot dog stand that you set up outside the student union every day at lunch time. Currently, you are selling hot dogs for a price of $3, and you sell 30 hot dogs a day (point A on the diagram). You are considering cutting the price to $2. The graph shows two possible increases in the quantity sold as a result of your price cut. Use the information in the graph (new quantities are given on the horizontal axis) to calculate the price elasticity between these two prices on each of the demand curves. Use the midpoint formula to calculate the price elasticities. On the demand curve containing the points "A" and "B", the price elasticity of demand for a price cut from $3 to $2 is -0.25. (Hint: Include the negative sign and enter your response rounded to two decimal places.) סי Price (dollars per hot dog) 30 37 C D₁ Quantity (hot dogs per day) 71 B D 4 De 3

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You own a hot dog stand that you set up outside the
student union every day at lunch time. Currently, you are
selling hot dogs for a price of $3, and you sell 30 hot dogs
a day (point A on the diagram). You are considering cutting
the price to $2. The graph shows two possible increases in
the quantity sold as a result of your price cut. Use the
information in the graph (new quantities are given on the
horizontal axis) to calculate the price elasticity between
these two prices on each of the demand curves. Use the
midpoint formula to calculate the price elasticities.
On the demand curve containing the points "A" and "B", the
price elasticity of demand for a price cut from $3 to $2 is
-0.25. (Hint: Include the negative sign and enter your
response rounded to two decimal places.)
Price (dollars per hot dog)
3
0
A
C
Der
71
B
D₁
б
D 49
30 37
Quantity (hot dogs per day)
87
71
D.C

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