Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 2.4P
A sporting goods store has estimated the demand curve for a popular brand of running shoes as a function of
- a. Calculate demand elasticity using the midpoint formula between points A and B, between points C and D, and between points E and F.
- b. If the store currently charges a price of $50, then increases that price to $60, what happens to total revenue from shoe sales (calculate P × Q before and after the price change)? Repeat the exercise for initial prices being decreased to $40 and $20, respectively.
- c. Explain why the answers to a. can be used to predict the answers to b.
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Compute the elasticity values. State the degree of elasticity and the nature of the goods.1. An increase in the price of Good Y from $5.00 to $6.00 causes the demand for Good X to decrease from 1000 units to 700 units.2. An increase in income from $3000 to $4000 causes the demand for chicken to increase from 6 to 7 kilos.3. The equation for a demand curve is P = 48 – 3Q. What is the elasticity in moving from a quantity of 5 to a quantity of 6?4. The equation for a supply curve is P = 3Q – 8. What is the elasticity in moving from a price of 4 to a price of 7?
Need number 4 and 5 answered
Elasticity:
What is elasticity? Elasticity refers to the concept that provide information about the sensitivity or responsiveness of one variable to another.
What is Price Elasticity of Demand? Price elasticity of demand is the responsiveness of consumers in term of quantity demanded with respect to the price change. It explains that how much quantity demanded changes with the change in the price by 1percent.
What is the formula that we will use to calculate it? The formula to calculate price elasticity of demand would be: =Percentage change in quantity demanded/percentage change in price
After calculating the Coefficient of Price Elasticity of Demand, what are the rules we use to characterize that price range? (i.e., What importance does the number one play?)
What is the total revenue test?
Suppose that your demand schedule for DVDs is as follows:
Quantity Demanded
Price
Quantity Demanded
(income-$10 000)
(income $12 000)
$8
40
50
$10
45
32
$12
24
30
$14
16
20
$16
8
12
Use the midpoint method to calculate your price elasticity of demand as the price of DVDS
increases from $8 to $10 if () your income is $10 000, and () your income is $12 000
4
Calculate your income elasticity of demand as your income increases from $10 000 to $12 000
it the price is $12
In relation to question b, is DVDa normal good or an inferior good. Why?
Chapter 5 Solutions
Principles of Economics (12th Edition)
Ch. 5 - Prob. 1.1PCh. 5 - Prob. 2.1PCh. 5 - Prob. 2.2PCh. 5 - Using the midpoint formula, calculate elasticity...Ch. 5 - A sporting goods store has estimated the demand...Ch. 5 - For each of the following scenarios, decide...Ch. 5 - For the following statements, decide whether you...Ch. 5 - Taxicab fares in most cities are regulated....Ch. 5 - Studies have fixed the short-run price elasticity...Ch. 5 - Prob. 2.9P
Ch. 5 - Prob. 2.10PCh. 5 - Prob. 2.11PCh. 5 - [Related to the Economics in Practice on p. 99] At...Ch. 5 - Prob. 3.2PCh. 5 - Prob. 4.1PCh. 5 - Prob. 4.2PCh. 5 - The cross-price elasticity values for three sets...Ch. 5 - Prob. 4.4PCh. 5 - World famous Burpee Beer is brewed in the small...Ch. 5 - Prob. 5.2P
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