Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 3, Problem 2CACQ
The demand curve for a product is given by
- What as the own
price elasticity of demand when - What is the own price elasticity of demand when
- What is the cross-price elasticity of demand between good X and good Z when
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The demand curve for a product is given Qdx = 1500 − 5Px − 0.2Pz by where Pz = $300.
a. What is the own price elasticity of demand when Px = $200? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below $200?b. What is the own price elasticity of demand when Px = $125? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above $125?c. What is the cross-price elasticity of demand between good X and good Z when Px = $125? What about when Px = $200? Are goods X and Z substitutes or complements?
The demand curve for a product is given by Qdx = 1,200 − 3Px − 0.1Pz where Pz = $300. a. What is the own price elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below $140? b. What is the own price elasticity of demand when Px = $240? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above $240? c. What is the cross-price elasticity of demand between good X and good Z when Px = $140? Are goods X and Z substitutes or complem
The demand curve for a product is given by QXd = 1,200 - 3PX - 0.1PZ where Pz = $300.a. What is the own price elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below $140?Instruction: Enter your response rounded to two decimal places.Own price elasticity: Demand is: (Click to select) elastic inelastic If the firm prices below $140, revenue will: (Click to select) increase not change decrease b. What is the own price elasticity of demand when Px = $240? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above $240?Instruction: Enter your response rounded to one decimal place.Own price elasticity: Demand is: (Click to select) inelastic elastic If the firm prices above $240, revenue will: (Click to select) decrease not change increase c. What is the cross-price elasticity of demand between…
Chapter 3 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 3 - Prob. 1CACQCh. 3 - The demand curve for a product is given by...Ch. 3 - Prob. 3CACQCh. 3 - Suppose the own price elasticity of demand for...Ch. 3 - Suppose the cross-price elasticity of demand...Ch. 3 - You are the manager of a firm that receives...Ch. 3 - A Quant jock from your firm used a linear demand...Ch. 3 - Prob. 8CACQCh. 3 - Prob. 9CACQCh. 3 - Prob. 10CACQ
Ch. 3 - Prob. 11PAACh. 3 - Prob. 12PAACh. 3 - For the first time in two years, Big G (the cereal...Ch. 3 - Prob. 14PAACh. 3 - You are a division manager at Toyota. If your...Ch. 3 - You are a manager in charge of monitoring cash...Ch. 3 - As newly appointed Energy Czar. your goal is to...Ch. 3 - As the owner of Barneys Broilers—a fast-food...Ch. 3 - Prob. 19PAACh. 3 - With milk sales sagging of late. The Milk...Ch. 3 - Prob. 21PAACh. 3 - Prob. 22PAACh. 3 - Prob. 23PAA
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- The demand curve for a product is given by QXd = 1,200 - 3PX - 0.1PZ where Pz = $300.a. What is the own price elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below $140?Instruction: Enter your response rounded to two decimal places.Own price elasticity: Demand is: inelastic or elastic ?If the firm prices below $140, revenue will: decrease or not change or increase ?b. What is the own price elasticity of demand when Px = $240? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above $240?Instruction: Enter your response rounded to one decimal place.Own price elasticity: Demand is: elastic or inelastic ?If the firm prices above $240, revenue will: not change or decrease or increase ?c. What is the cross-price elasticity of demand between good X and good Z when Px = $140? Are goods X and Z substitutes…arrow_forwardPlease answerarrow_forwardThe elasticity of Supply is an important concept in Microeconomics as it relates to a business's ability to adjust its production and its production facility in response to market developments. Think of some examples of products and businesses that would have various degrees of Elasticity of Supply and share them here. For example, what would be the Elasticity of Supply for an original piece of art? What does this imply for the adjustment in this market to a change in Demand? How would you describe the Elasticity of Supply for a product such as peaches, plums, and other tree fruit? Consider first a brief period, such as weeks, and next a much longer period such as five years. How does the time horizon influence market adjustment when there is a change in Demand?arrow_forward
- If a good has elastic demand and its price is decreased, what happens to the total revenue? Explain graphicallyarrow_forwardIf a firm wanted to know whether the demand for its product was elastic, unit-elastic, or inelastic, then the firm could change price a little bit and observe what happens to total revenue. not do anything as there is no way to find an elasticity value. survey competitors and ask them what they think demand elasticity is for the product. talk to its customers.arrow_forwardA bakery works out a demand function for its chocolate chip cookies and finds it to be q = D(x) 895-11x, where q is the quantity of cookies sold when the price per cookie, in cents, is x. Use this information to answer parts a) through f). a) Find the elasticity. E(x)= b) At what price is the elasticity of demand equal to 1? (Round to the nearest cent as needed.) c) At what prices is the elasticity of demand elastic? OA. Greater than 41c OB. Less than 41c OC. Prices are elastic at all values. OD. Prices cannot be elastic in this case d) At what prices is the elasticity of demand inelastic? OA. Prices cannot be inelastic in this case OB. Less than 41e OC. Greater than 41 OD. Prices are inelastic al all values e) At what price is the revenue a maximum? x= 0- (Round to the nearest cent as needed. Use a comma to separate answers as needed.) At a price of 17¢ per cookie, will a small increase in price cause the total revenue to increase or decrease? Decrease O Increasearrow_forward
- R.C. Willey's economists report that the quantity demanded for their microfiber sofas is given by the equation below. Px is their own price, C and D are other expensive good sold in the store with prices Pc and PD, M is income, and A is advertising expense. Qx=5009 What is the cross price elasticity of demand between X and D when Px =456, Pc=480, PD=579.8, M=40289, A=2644? (give me at least three decimal places) Answer: -6.7PX-4Pc+1.9Pp+0.021M+0.67A Checkarrow_forwardPrice (S) 20 18 16 14 12 10 8 6 4 2 1 2 3 4 5 6 Quantity 2. The demand curve for a product is given by Qd = 1,000 - 2P, +.02P where P, = $400. a. What is the own price elasticity of demand when P,= $154? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price below $154?arrow_forwardSuppose the demand curve for oPad is P = 500-QD 10 where P is the price of oPad and QD is the quantity of oPad. What is the price elasticity of demand when the price is $30? (Please keep 1 decimal place in your answer)arrow_forward
- How does the elasticity of a product impact Corporate Revenue? Why is it important for companies to understand this concept?arrow_forwardDescribe in detail the determinants of price elasticity of demand. Why is a perfectly elastic demand curve horizontal? What does that mean? Why is a perfectly inelastic demand curve vertical? What does that mean? Suppose that a two percent decline in coffee leads to a one percent increase in quantity demanded, would that show demand to be elastic or inelastic?arrow_forwardThe demand for a product is Qd=A-BP, where P is its price and A and B are positive numbers Suppose that when the price is $35 the amount demanded is 224 and the price elasticity of demand is -5 What is the value of A? What is the value of B? What price will maximize revenue ?arrow_forward
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