(a)
To analyze the
Answer to Problem 1TY
The demand curve will be a vertical straight line.
Explanation of Solution
When the percentage change in quantity demanded exceeds the percentage change in price, the demand is said to be elastic.
When it is less than the percentage change in price, then the demand is said to be inelastic. When the percentage change is equal, then the demand is unitary elastic.
The shape of a demand curve depends on the elasticity of demand for a good. A medicine that means life or death for a patient is a necessary good for the patient. Hence, its demand is perfectly inelastic.
The curve of perfectly
The graph shows that whatever be the price charged for the medicine, the patient will purchase it because it means life or death for him. Hence, this kind of demand curve is a vertical straight line with elasticity 0.
(b)
To analyze: the demand curve of French fries in a food court with kiosks offering many types of food.
Answer to Problem 1TY
The demand curve will be flat in shape.
Explanation of Solution
Elasticity of demand refers to the degree of responsiveness of a change in the quantity demanded for a given change in the price level of a good.
When the percentage change in quantity demanded exceeds the percentage change in price, the demand is said to be elastic.
When it is less than the percentage change in price, then the demand is said to be inelastic. When the percentage changes are equal, then the demand is unitary elastic.
The shape of a demand curve depends on the elasticity of demand for a good. French fries are good with many other substitutes. K are offering a variety of other goods which makes demand curve of French fries more elastic.
The curve of this demand is shown below:
The graph shows that a slight increase in the price of French fries will make consumers shift their preferences to other goods. Hence, the quantity demanded will decrease largely. This type of demand curve is flat with an elasticity greater than 1.
Want to see more full solutions like this?
Chapter 4 Solutions
Macroeconomics: Principles and Policy (MindTap Course List)
- The tractor used by a farmer to produce his out put forms which partarrow_forwardHW Ch5 Calculate the daily total revenue when the market price is $180, $160, $140, $120, $100, $80, $60, and $40 per bippitybop. Then, use the green point (triangle symbol) to plot the daily total revenue against quantity corresponding to these market prices on the following graph. 2 @ 3840 3520 3200+ 2880 2560+ 2240 TOTAL REVENUE (Dollars) 1920 1600 1280 960 + 640+ 0 0 8 16 24 32 40 48 56 64 72 80 QUANTITY (Bippitybops per day) Total Revenue ? According to the midpoints formula, the price elasticity of demand between points A and B on the initial graph is approximately . Suppose the price of bippitybops is currently $60 per bippitybop, shown as point A on the initial graph. Because the price elasticity of demand between points A and B is , a $20-per-bippitybop decrease in price will lead to MacBook Air in total revenue per day. F2 80 F3 #3 $ 4 5 6 F6 < F7 * 8 & 27 DII 8 F8 F9 F10 61 0 W E R T Y U 0 P S D LL F G H J K Larrow_forwardNot use ai pleasearrow_forward
- China is a leader in international trade, has one of the highest GDPs, and currently holds the largest foreign exchange reserve in the world. Is it fair for China to fix its currency by undervaluing it on the market? How does keeping its currency undervalued give it a favorable position in international trade? What about from the viewpoints of international companies and consumers?arrow_forwardExplain the requirements of the states that have enacted legislation to protect taxpayers from predatory tax return preparers and tax refund advances.arrow_forwardResponsd to Luis Rodriguez 1800 tons of pomegranates a year is a lot of sweetness! So, you can get 71 Afghanis for $1? How cool. Does that mean you can buy a lot of stuff in Afghanistan for only $1? How do you know that your purchasing power in Afghanistan is stronger than in the United States? Yes, with an exchange rate of 71 Afghan Afghani for 1 US dollar, you can buy many things in Afghanistan for just $1. However, purchasing power isn't solely determined by the exchange rate. It also depends on the cost of goods and services in each country. For example, if a meal in Afghanistan costs 200 Afghanis, you would need about $2.82 to buy that meal in US dollars (since 200 Afghanis divided by 71 Afghanis per dollar equals approximately $2.82). So, while the exchange rate allows you to get more Afghanis for your dollars, you also need to consider how much things cost in Afghanistan. Now that the world seems to like Afghani stuff and is buying more of it, does that mean your…arrow_forward
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning