Survey Of Economics
10th Edition
ISBN: 9781337111522
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 5, Problem 10SQP
To determine
The relationship between the slogan and the firm’s
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Consider two scenarios giving some information about price elasticity of demand. For each scenario, calculate the missing data
and determine if the price change under consideration will increase, decrease, or not change the firm's total revenue. Round your
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At Betty's Burgers, the hamburgers have a price elasticity of demand equal to -4.55. Suppose the number of burgers Betty sells
increases by 95.00%
Betty's prices must have decreased -
m
Betty can expect her total revenue to increase.
Patty can expect the number of golfers to
...by
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Patty's Putts increased the price of a round of miniature golf by 46.0%. Patty has calculated her price elasticity of demand at
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....by
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Bob of Bob's Burgers used to charge $2.20 for a certain hamburger and sold 4000 units. When he increased the price by $1, he sold 3000 units. Calculate the hamburger's price elasticity of demand using the technique in the PowerPoints and text. You will use this information again in the next question.Enter only numbers, a decimal point, and/or a negative sign as needed. Round all intermediate steps to four decimal places and your final answer to two decimal places.
A local coffee house is considering increasing the price on a cup of coffee from $1.59 to $1.89 per cup. They anticipate the quantity demanded to decrease from 350 cups sold per week to 325 cups sold per week. Calculate the price elasticity and the change in revenue? What are your recommendations for the coffee house?
Chapter 5 Solutions
Survey Of Economics
Ch. 5.3 - According to the previous discussion, what factors...Ch. 5 - Prob. 1SQPCh. 5 - Prob. 2SQPCh. 5 - Prob. 3SQPCh. 5 - Prob. 4SQPCh. 5 - Suppose a university raises its tuition from 3,000...Ch. 5 - Prob. 6SQPCh. 5 - Suppose a movie theater raises the price of...Ch. 5 - Charles loves Mello Yello and will spend 10 per...Ch. 5 - Prob. 9SQP
Ch. 5 - Prob. 10SQPCh. 5 - Prob. 11SQPCh. 5 - Prob. 12SQPCh. 5 - Prob. 1SQCh. 5 - Prob. 2SQCh. 5 - Prob. 3SQCh. 5 - Prob. 4SQCh. 5 - Prob. 5SQCh. 5 - If a decrease in the price of movie tickets...Ch. 5 - Prob. 7SQCh. 5 - Prob. 8SQCh. 5 - Prob. 9SQCh. 5 - Along a segment of the demand curve where the...Ch. 5 - Prob. 11SQCh. 5 - Prob. 12SQCh. 5 - Prob. 13SQCh. 5 - Prob. 14SQCh. 5 - Prob. 15SQCh. 5 - Prob. 16SQCh. 5 - Prob. 17SQCh. 5 - Prob. 18SQCh. 5 - Prob. 19SQCh. 5 - Prob. 20SQCh. 5 - Prob. 21SQ
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- In an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price and an 11 percent increase in advertising. If the price elasticity of demand is 1.5 and the advertising elasticity of demand is +0.6, would you expect an increase or decrease in total revenues?arrow_forwardSuppose Erin, the owner-manager of a local hotel projects the following demand for her rooms: a. Calculate the price elasticity of demand between 90 and 110. b. Is the price elasticity of demand between 90 and 110 elastic, unit elastic, or inelastic? c. Will Erins total revenue rise if she increases the price from 90 to 110? d. Calculate the price elasticity of demand between 110 and 130. e. Is the price elasticity of demand between 110 and 130 elastic, unit elastic, or inelastic? f. Will Erins total revenue rise if she increases the price from 110 to 130?arrow_forwardThe Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?arrow_forward
- Along a segment of the demand curve where the price elasticity of demand is less than 1, a decrease in price a. is impossible. b. will increase total revenue. c. will decrease total revenue. d. decreases quantity demanded.arrow_forwardCharles loves Mello Yello and will spend 10 per week on the product no matter what the price. What is his price elasticity of demand for Mello Yello?arrow_forwardExplain why the advertising elasticity of the market demand for beer may be less than the advertising elasticity of the demand for one particular brand.arrow_forward
- Anna owns the Sweet Alps Chocolate store. She charges $500 per pound for her hand made chocolate. You, the economist, have calculated the elasticity of demand for chocolate in her town to be 2.5. If she wants to increase her total revenue, what advice will you give her and why? Explain your answer.arrow_forwardA local pizzeria sells 500 large pepperoni pizzas per week at a price of $20 each. Suppose the owner of the pizzeria tells you that the price elasticity of demand for his pizza is -3, and he asks you for advice. He wants to know two things. First, how many pizzas will he sell if he cuts his price by 10%? Second, how will his revenue be affected? If he cuts his price by 10%, his sales will increase to______pizzas, and his total revenue will increase to $ _____.arrow_forwardA firm manufactures high priced gold plated wrist watches. The firm is considering lowering the price of its watches from the current $1000 per unit to $700 per unit. The firm currently sells 6000 units per year. The firm's staff economist believes the price elasticity of demand to be -3 over this price range. If the firm lowers the price, will the total revenue increase, decrease or remain unchanged? Why? If it lowers the price, what will be the new level of quantity demanded? Of new total revenue? Would you suggest the firm to offer further price discount? Why? And Why not?arrow_forward
- A local pizzeria sells 500 large pepperoni pizzas per week at a price of $20 each. Suppose the owner of the pizzeria tells you that the price elasticity of demand for his pizza is -2, and he asks you for advice. He wants to know two things. First, how many pizzas will he sell if he cuts his price by 10%? Second, how will his revenue be affected?arrow_forwardHow can we increase the Total Revenue of products using elasticity?Explain by giving examples. Give a detailed example of elasticity.arrow_forwardSuppose that you are currently charging $10 for your product and selling 10,000 items. Calculate your total revenue. If you increase your price to $11, you estimate that you will sell 8,000 units. Calculate your total revenue. Calculate the price elasticity of demand.arrow_forward
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