MICROECONOMICS-ACCESS CARD <CUSTOM>
11th Edition
ISBN: 9781266285097
Author: Colander
Publisher: MCG CUSTOM
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Chapter 4.1, Problem 6Q
To determine
Explain the effects of
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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).
Genovia has experienced exceptional
growth in recent years. Its GDP per capita
has increased from around $30,000 to
$50,000 in last 5 years. Over the period
quantity demanded of personal cars has
increased from 450,000 units per year to
600,000 units. Quantity demanded of
public transport, however, has declined
from 10,000 buses to 7,000 buses.
Calculate income elasticity of demand and
tell which product is a normal good and
which one is inferior.
Melanie really enjoys using her old-school charcoal grill to cook steaks, but she has found that due to environmental regulations, charcoal prices have gone up 50%. What is her price elasticity of demand for the rest of this month going to be compared to what it will be in the spring? Please explain why.
Chapter 4 Solutions
MICROECONOMICS-ACCESS CARD <CUSTOM>
Ch. 4.1 - Prob. 1QCh. 4.1 - Prob. 2QCh. 4.1 - Prob. 3QCh. 4.1 - Prob. 4QCh. 4.1 - Prob. 5QCh. 4.1 - Prob. 6QCh. 4.1 - Prob. 7QCh. 4.1 - Prob. 8QCh. 4.1 - Prob. 9QCh. 4.1 - Prob. 10Q
Ch. 4 - Prob. 1QECh. 4 - Prob. 2QECh. 4 - Prob. 3QECh. 4 - Prob. 4QECh. 4 - Prob. 5QECh. 4 - Prob. 6QECh. 4 - Prob. 7QECh. 4 - Prob. 8QECh. 4 - Prob. 9QECh. 4 - Prob. 10QECh. 4 - Prob. 11QECh. 4 - Prob. 12QECh. 4 - Prob. 13QECh. 4 - Prob. 14QECh. 4 - Prob. 15QECh. 4 - Prob. 16QECh. 4 - Prob. 17QECh. 4 - Prob. 18QECh. 4 - Prob. 19QECh. 4 - Prob. 20QECh. 4 - Prob. 21QECh. 4 - Prob. 22QECh. 4 - Prob. 23QECh. 4 - Prob. 24QECh. 4 - Prob. 1QAPCh. 4 - Prob. 2QAPCh. 4 - Prob. 3QAPCh. 4 - Prob. 4QAPCh. 4 - Prob. 5QAPCh. 4 - Prob. 6QAPCh. 4 - Prob. 1IPCh. 4 - Prob. 2IPCh. 4 - Prob. 3IPCh. 4 - Prob. 4IPCh. 4 - Prob. 5IP
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Similar questions
- 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_forwardProve that price elasticity of demand is not the same as the slope of a demand curve.arrow_forwardIf the midpoint on a straight-line demand curve is at a price of $7, what can we say about the elasticity of demand for a price change from $12 to $10? What about from $6 to $4?arrow_forward
- Suppose 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_forwardIf the elasticity of demand for hamburgers equals 21.5 and the quantity demanded equals 40,000, predict what will happen to the quantity demanded of hamburgers when the price increases by 10 percent. If the price falls by 5 percent, what will happen?arrow_forwardSuppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula) when price decreases from $8 to $6 is Price Quantity Demanded $ 10 30 9 40 8 50 7 60 6 70 Multiple Choice 0.86. 0.33. 1.14. 1.33.arrow_forward
- HOW DO YOU RESPOND TO PRICE ELASTICITY? People have unlimited needs and wants for their personal satisfaction and because of that the prices of products easily get changed. Everyone is affected with the new normal in the market. The prices of products have become very expensive since the outbreak of the pandemic, not only in our locality, but in the whole world. If your income or the income of your family is not enough to purchase the basic commodities needed by your family, what goods would you buy, instead? What economic or marketing strategies would you apply? How would you respond to the price changes of these commodities?arrow_forwardThe following graph shows the demand curve for kumquats. Points A, B, C, and D mark price ranges over which you will be asked to calculate the price elasticity of demand for this good. Use the purple rectangle labeled Total Revenue (diamond symbols) to compute total revenue at various prices along the demand curve. To see the area of the Total Revenue rectangle, select the shaded area with your mouse. You will not be graded on where you place the rectangle. Total Revenue012345678910109876543210PRICE (Dollars per bushel per month)QUANTITY (Thousands of bushels)ABCD Calculate the price elasticity of demand between points A and B and points C and D using the midpoint method, and fill in the Price Elasticity of Demand column in the following table. Then for each price range, identify if demand is elastic, inelastic, or unit elastic. Price Range Price Elasticity of Demand Elastic, Inelastic, Unit Elastic Change in Total Revenue between Points A and B…arrow_forwardWhat are two goods (or services) that you buy that have the highest Cross-Price Elasticity of Demand? Can you give an example of two goods (or services) that you buy that have a negative Cross-Price Elasticity of Demand? What about Income Elasticity of Demand? What good or service do you buy that has a high Income Elasticity of Demand? Can you also give an example of a good or service that you buy that has a negative Income Elasticity of Demand?arrow_forward
- Which of the following is most likely to have a low price elasticity of demand? A good that is very expensive. A good with no close substitutes. A good that most people consider a luxury. All are equally likely to have a low price elasticity of demand.arrow_forwardAssume that you work in a movie theater and you want to increase revenue at the theater after the pandemic. The pandemic has caused people to find many activities that are alternatives to going to the movie theater. Fill in the blanks below with the words that best complete the sentences: Because consumers have found more substitutes for going to the movie theater, price elasticity of demand for movie tickets is more likely to be [ elastic or inelastic ]. Because of this price elasticity of demand, you should [increase or decrease] the price of movie tickets if you want to increase revenue.arrow_forwardFigure below shows the demand curve for chicken. Price per Pound $2.50 $1.50 400 500 Pounds of Chicken (thousands) Between points L and M, the price elasticity of demand is 0.44, and demand is elastic 0.44, and demand is inelastic 2.25, and demand is elastic 2.25, and demand is inelastic 0.028, and demand is inelasticarrow_forward
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