Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 7E
In 2010, Americans smoked 315 billion cigarettes, or 15.75 billion packs of cigarettes. The average retail
a. Using this information, derive linear demand and supply curves for the cigarette market.
b. In 1998, Americans smoked 23.5 billion packs of cigarettes, and the retail price was about $2.00 per pack. The decline in cigarette consumption from 1998 to 2010 was due in part to greater public awareness of the health hazards from smoking, but was also due in part to the increase in price. Suppose that the entire decline was due to the increase in price. What could you deduce from that about the price elasticity of demand?
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Students have asked these similar questions
Consider two markets: the market for coffee and the market for hot cocoa. The initial equilibrium for both markets is the same,
the equilibrium price is $5.50, and the equilibrium quantity is 23.0. When the price is $12.75, the quantity supplied of coffee is
71.0 and the quantity supplied of hot cocoa is 111.0. For simplicity of analysis, the demand for both goods is the same.
Using the midpoint formula, calculate the elasticity of supply for hot cocoa. Please round to two decimal places.
Supply in the market for coffee is
O more elastic than supply in the market for hot cocoa.
less elastic than supply in the market for hot cocoa.
the same elasticity as supply in the market for hot cocoa.
There is not enough information to tell which has a higher elasticity.
O O O O
Fill out the tables by calculating the price elasticity of demand and of supply (use the mid-point formula). Report elasticities with 2 decimals.
Demand and Supply Schedule for Good X:
Unit price of x
Quantity demanded of x
Quantity supplied of x
Price elasticity of demand of x (2 decimals)
Price elasticity of supply of x
(2 decimals)
$100
0
5
n/a
n/a
$95
2
4.5
$90
4
4
$85
6
3.5
$80
8
3
$75
10
2.5
$70
12
2
$65
14
1.5
$60
16
1
$55
18
0.5
Demand and Supply Schedule for Good Y:
Unit price of y
Quantity demanded of y
Quantity supplied of y
Price elasticity of demand of y
(2 decimals)
Price elasticity of supply of y
(2 decimals)
$100
10
40
n/a
n/a
$90
11
35
$80
12
30
$70
13
25
$60
14
20
$50
15
15
$40
16
10…
Suppose you work for a local car parts supplier, and you’re looking at ways to increase revenue. You remember from your economics course, that people respond to price changes. You decide to test this theory. Assume, that as the price of an alternator falls from $40.00 to $38.00 the quantity of Y demanded increases from 110 to 118.
Then the coefficient of price elasticity of demand is:
If you want to increase revenue, you should:
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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