Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 2, Problem 6E
(a)
To determine
Free market price.
(b)
To determine
Number of apartments is constructed.
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Harding Enterprises has developed a new product called the “Quest Simulator (QS)”. The market demand for this product is given as follows: Q = 240 - 4P.
If QS is priced at $40, what is the point price elasticity of demand? Is demand elastic or inelastic?
What is the maximum amount that consumers are willing to pay for the quantity demanded at the price of $40? (hint: it includes both the total expenditures and the consumer surplus)
If the price of QS is increased slightly from $40, what will happen to the total expenditure on the product? What will happen to the consumer surplus?
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Which of the following condition will shift the demand of the product to the right? (Check all that apply)
Group of answer choices
Assume the product is a normal good and the overall population income increases.
After FDA announced that all apples from California need to recall because it is related to a serious health risk, the demand for California apples changes in the market.
An economist predicts the future oil price will increase 30% in three months, so the demand for oil changes.
When the price of a complement goods increases in the market.
During the pandemic people are moving out of California, so the demand for Uber in California changes.
Suppose that the demand curve for a product is given by
Qxd =100-2Px+7Py
where = £20, where = £20 is the price of another product
a).Calculate the demand for good X in this market at the current price level. How much revenue would the firm make?
b).If the firm wishes to increase total revenue, would it need to increase or decrease the current price of good X?
c).Calculate the cross-price point elasticity between goods X and Y at the current price level. Are the goods complements or substitutes?
Chapter 2 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - If a 3-percent increase in the price of corn...Ch. 2 - Prob. 4RQCh. 2 - Explain why for many goods, the long-run price...Ch. 2 - Why do long-run elasticities of demand differ from...Ch. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - In a discussion of tuition rates, a university...
Ch. 2 - Suppose the demand curve for a product is given by...Ch. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - Prob. 1ECh. 2 - Consider a competitive market for which the...Ch. 2 - Prob. 3ECh. 2 - Prob. 4ECh. 2 - Prob. 5ECh. 2 - Prob. 6ECh. 2 - In 2010, Americans smoked 315 billion cigarettes,...Ch. 2 - In Example 2.8 we examined the effect of a...Ch. 2 - In Example 2.8 (page 52), we discussed the recent...Ch. 2 - Prob. 12E
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Similar questions
- Which of the following would not cause market demand for a normal good to decline? a. An increase in the price of a substitute b. An increase in the price of a complement c. A decline in consumer income d. Consumer expectations that the good will go on sale in the near future e. An announcement by the Surgeon General that the product contributes to premature deatharrow_forwardProve that price elasticity of demand is not the same as the slope of a demand curve.arrow_forward(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?arrow_forward
- Estimates presented in Exhibit 5 show that Android users have a higher price elasticity of demand for apps in the Google Play Store than do iPhone users in the Apple App Store. Why might Android users tend to be more sensitive to app prices than iPhone users? What categories or types of apps (for example, games/social media) do you think have the highest price elasticities?arrow_forwardSuppose a straight-line downward-sloping demand curve shifts rightward. Is the price elasticity of demand higher, lower, or the same between any two prices on the new (higher) demand curve than on the old (lower) demand curve?arrow_forwardFor each of the following, identify where demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic: a. Price rises by 10 percent, and quantity demanded falls by 2 percent. b. Price falls by 5 percent, and quantity demanded rises by 4 percent. c. Price falls by 6 percent, and quantity demanded does not change. d. Price rises by 2 percent, and quantity demanded falls by 1 percent.arrow_forward
- For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect on the demand for hybrid gasoline-electric vehicles such as the Toyota Prius. Then do the same for each of the determinants of supply in Equation 2.2. In each instance, would equilibrium market price increase or decrease? Consider substitutes such as plug-in hybrids, the Nissan Leaf and Chevy Volt, and complements such as gasoline and lithium ion laptop computer batteries.arrow_forwardConsider the following supply schedule: What is the price elasticity of supply between a. P = 10 and P = 8? b. P = 8 and P = 6? c. P = 6 and P = 4? d. P = 4 and P = 2? e. P = 2 and P = 0?arrow_forwardAn economist estimates that a market has a demand curve of the form P = 26 - (0.867) Q and a supply curve of the form P = 0.5 + (1.21) Q. (See the curves graphed in the figure below.) Accordingly, she estimates that the equilibrium price ( P e) in the market will be $15.36 (or $15.355561). This means that the amount of the product bought and sold in the market must be ____.arrow_forward
- Suppose at the current price, the price elasticity of demand for a firm's product is ε = -1/2. Which of the following is true: A 2% change in the price would be expected to impact quantity demanded by 1% If the price of the product increases, quantity demanded will fall If the firm raises it's price, revenues will increase. All of the abovearrow_forwardThe government of a State has been experiencing an increase in number of obesity cases. Research suggests an increase in consumption of a particular fast food item is responsible for high number of obesity cases. As a result, the government of that State is considering an imposition of $1 tax. Monthly demand and supply for this good are QD=21-1P and QS= -1+1P respectively. Draw the demand and Supply curve for fast food before the tax is imposed. Calculate the equilibrium price and quantity, consumer and producer surplus, and label them on the graph. Calculate the price elasticity of demand and supply for fast food. If the State government imposes a tax, who will bear the most of the burden of the tax? Suppose that the State government finally imposes a $1 tax on fast food. What will the new equilibrium price and quantity? Include the tax on your graph. Calculate the consumer and producer surplus and label them on the graph. Is there any deadweight loss resulting from the tax on that…arrow_forwardA movement along the demand curve, represented by points A and B, is shown in the diagram to the right. Point A (30, 70) is the initial point, and point B (40, 60) is the point after the price change. The textbook provides two methods for computing price elasticity of demand. Using the information above, compute the price elasticity of demand using each of these methods. (Enter your responses rounded to two decimal places and include a minus sign if necessary.) Using the initial values as a base, the elasticity of demand is C... Price per unit ($) 1007 90- 80- 70- 60- 50- 8 8 8 40- 30- 20- 10- 70 60 0 Demand A 00 B :30 40 10 20 30 40 50 60 70 Quantity per unit of time 80 D 90 1arrow_forward
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