Microeconomics
2nd Edition
ISBN: 9781259813337
Author: KARLAN, Dean S., Morduch, Jonathan
Publisher: Mcgraw-hill Education,
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Question
Chapter 4, Problem 11PA
To determine
To draw the price effect, quantity effect on graph and find which has larger effect. Find whether there is increase or decrease in total revenue.
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How do I calculate total revenue with an increase or decrease in price? Known factors are price elasticity of demand, income elasticity, and cross-price elasticity.
Choose a product which you are familiar with. Using the internet for research (please cite your source), what is the price elasticity of demand for this product or group of products? What does that mean with respect to a 10% increase in the price of this good? What happens to quantity demanded? Which of the 4 determinants of price elasticity of demand do you believe drives this outcome about the good's price elasticity? If there is more than one determining factor, please explain your reasoning. [for many goods, all of the 4 determinants come into play - I just want you to choose the one or two that you believe are most relevant).
Draw the price effect and the quantity effect fora price change from $60 to $70. Which effect islarger? Does total revenue increase or decrease?No calculation is necessary.
Chapter 4 Solutions
Microeconomics
Ch. 4 - You are advising a coffee shop manager who wants...Ch. 4 - Prob. 2RQCh. 4 - You are working as a private math tutor to raise...Ch. 4 - You are working as a private math tutor to raise...Ch. 4 - You have been hired by the government of Kenya,...Ch. 4 - Prob. 6RQCh. 4 - Which will have a more price-elastic supply over...Ch. 4 - Certain skilled labor, such as hair cutting,...Ch. 4 - Although we could describe both the cross-price...Ch. 4 - Name two related goods you consume that would have...
Ch. 4 - Prob. 11RQCh. 4 - In France, where cheese is an important and...Ch. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - When the price of a bar of chocolate is $1, the...Ch. 4 - Prob. 2PACh. 4 - Three points are identified on the graph inÂ...Ch. 4 - Prob. 4PACh. 4 - In each of the following instances, determine...Ch. 4 - In each of the following instances, determine...Ch. 4 - Problems 7 and 8 refer to the demand schedule...Ch. 4 - Problems 7 and 8 refer to the demand schedule...Ch. 4 - Prob. 9PACh. 4 - Prob. 10PACh. 4 - Prob. 11PACh. 4 - Prob. 12PACh. 4 - Use the graph in Figure 4P-3 to calculate the...Ch. 4 - If the price of a haircut is $15, the number of...Ch. 4 - Prob. 15PACh. 4 - In each of the following instances, determine...Ch. 4 - Prob. 17PACh. 4 - Prob. 18PACh. 4 - For each of the following pairs, predict whether...Ch. 4 - Prob. 20PACh. 4 - Prob. 21PA
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- Price elasticity of demand measures the responsiveness of the quantity demanded to a change in price when all other influences on buyers’ plans remain the same. Write an essay explaining the different types of price elasticity of demand.arrow_forwardIdentify a product or service for which you use on a regular basis. Discuss the product/service in terms of the Law of Demand from your perspective as the customer and consumer of the item. How does price impact your quantity demanded? In other words, what is your change in quantity demanded as a result in an increase or decrease in the product’s price? What are some shift factors of demand (anything other than price) that can adjust your overall demand for the product?arrow_forwardFor Roberto, tacos are a necessity. Which statement best describes the situation? Roberto's income elasticity of demand is 4. Roberto's own- price elasticity of demand is -1.5. Roberto's income elasticity of demand is 0.4. Roberto's income elasticity of demand is -4. Roberto's income elasticity of demand is -0.4.arrow_forward
- What is the formula for the price elasticity of demand? The percentage change in the A) quantity demanded divided by the percentage change in the price of a substitute or complement. B) quantity demanded divided by the percentage change in price. C) quantity demanded divided by the percentage change in income. D) quantity supplied divided by the percentage change in price.arrow_forwardTyped and correct answer please. I ll ratearrow_forwardHow are you going to increase your total revenue, if the demand of your product is inelastic? a. Increasing price b. Decreasing price c. changing price will not affect total revenue d. total revenue is increasing while the price changesarrow_forward
- When price is $5, 20 units of a good are sold. When price is $9, 10 units are sold. Calculate the price elasticity of demand for this good over this price range using the midpoint formula. Calculate the elasticity when price is exactly $9 using the formula for point elasticity. Show your work.arrow_forwardWhat types of things might impact price elasticity?arrow_forwardFor a good with the following demand: Quantity Demanded Price 6000 $20 14,000 $15 (a) Calculate the price elasticity of demand using the Midpoint Method. (b) Is the demand for this good considered elastic or inelastic? (b) Do you think it is more likely that the average consumer will consider this good a necessity or a luxury? How did you determine your answer?arrow_forward
- What is total revenue if price and quantity and $5 and 20 unitsarrow_forwardPrice elasticity for Product A is -2.5 Price elasticity for Product B is -1.5 Which product is more senstive to a change in price? And how so?arrow_forwardIf there is a decrease in income to consumers, what will happen to the sale of a product? Known factors are price elasticity and income elasticity. I am looking for the formulas. Thanksarrow_forward
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