SURVEY OF ECONOMICS
SURVEY OF ECONOMICS
10th Edition
ISBN: 2818440041594
Author: Tucker
Publisher: CENGAGE L
Question
Book Icon
Chapter 5, Problem 4SQP

(a)

To determine

Price elasticity of demand.

(a)

Expert Solution
Check Mark

Explanation of Solution

The general formula for calculating price elasticity of demand is given below.

Price elasticity of demand curve=QuantityNewQuantityOld(QuantityNew+QuantityOld2)PriceNewPriceOld(PriceNew+PriceOld2) (1)

Substitute the respective values in Equation (1) to calculate the price elasticity of demand in the first case.

Price elasticity of demand=(4020(40+202))(2025(20+252))=(2030)(522.5)=0.6666660.222222=3

Price elasticity of demand is 3 (ignore the sign).

Economics Concept Introduction

Price elasticity of demand: Price elasticity refers to the responsiveness of changes or the change in quantity demanded due to the change in price.

(b)

To determine

Price elasticity of demand.

(b)

Expert Solution
Check Mark

Explanation of Solution

By using Equation (1), the calculation of price elasticity of demand in second case is shown below:

Price elasticity of demand=(6040(60+402))(1520(15+202))=(2050)(517.5)=0.40.285714=1.4

Price elasticity of demand is 1.4.

Economics Concept Introduction

Price elasticity of demand: Price elasticity refers to the responsiveness of changes or the change in quantity demanded due to the change in price.

(c)

To determine

Price elasticity of demand.

(c)

Expert Solution
Check Mark

Explanation of Solution

By using Equation (1), the calculation of price elasticity of demand in third case is shown below:

Price elasticity of demand=(8060(80+602))(1015(10+152))=(2070)(512.5)=0.2857140.4=0.71

Price elasticity of demand is .71.

Economics Concept Introduction

Price elasticity of demand: Price elasticity refers to the responsiveness of changes or the change in quantity demanded due to the change in price.

(d)

To determine

Change in demand and supply.

(d)

Expert Solution
Check Mark

Explanation of Solution

By using Equation (1), the calculation of price elasticity of demand in fourth case is shown below:

Price elasticity of demand=(10080(100+802))(510(5+102))=(2090)(57.5)=0.2222220.666666=0.33

Price elasticity of demand is .33.

Economics Concept Introduction

Price elasticity of demand: Price elasticity refers to the responsiveness of changes or the change in quantity demanded due to the change in price.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Which of the following graphs best represents the production possibility frontier of Country Y (Line Y), the production possibility frontier of Country Z (Line Z), and the production possibility frontier of this whole economy (Line W)?  (Hint: Find W by adding the productive capabilities of Country Y and Z) Group of answer choices
Which of the following factors tend to decrease the wage differential between union and non union workers:   unions tend to organize the firms with the lowest ability to pay initially   all of the above   unions must moderate their wage demand to keep workers competitive   some nonunion employers pay their employees above union wages   only ‘a’ and ‘b’ above
The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry. Price (dollars) 24 8 MC ATC MR 30 D 45 50 Quantity/time The firm will maximize its profit at a quantity of units. After choosing the profit maximizing quantity, the firm will charge a price of The firm will receive $ in revenue at the profit-maximizing quantity. The total cost of production for this profit-maximizing quantity is S The maximum profit the firm can earn in this situation is $ per unit for this output. How will the situation change over time? Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost. ◇ Losses will induce firms to leave this market until the profit maximizing price falls to zero. The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity. This market is already in long-run equilibrium, and will not…
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Text book image
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Text book image
Micro Economics For Today
Economics
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Cengage,
Text book image
Economics For Today
Economics
ISBN:9781337613040
Author:Tucker
Publisher:Cengage Learning
Text book image
Survey Of Economics
Economics
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Cengage,
Text book image
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning