MICROECONOMICS-ACCESS CARD <CUSTOM>
11th Edition
ISBN: 9781266285097
Author: Colander
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 6, Problem 10QE
A newspaper recently lowered its price from $5.00 to $3.00. As it did, the number of newspapers sold increased from 240,000 to 280,000. (LO6-3)
- a. What was the newspaper’s
elasticity of demand ? - b. Given that elasticity, did it make sense for the newspaper to lower its price?
- c. What would your answer be if much of the firm’s revenue came from advertising and the higher the circulation, the more it could charge for advertising?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that the Blinn College Deli is currently selling 500 chef salads per day when the price is $5. Suppose that the own-price elasticity of
demand for chef salads is -0.8. As the Deli manager you decide to lower the price by $0.50. Which of the following is most likely to happen?
Chef salad sales will fall by approximately 8% and total revenue will be lower.
Chef salad sales will rise by approximately 8% and total revenue will be higher.
Chef salad sales will fall by approximately 8% and total revenue will be higher.
Chef salad sales will rise by approximately 8% and total revenue will be lower.
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 -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 $ _____.
QUESTION 4.6
Your summer internship is with the strategy department of Chevy Chase Bank (CCB).
They are considering changing the fee they charge to non-customers who use their automated teller
machines (ATMs). CCB customers can use CCB ATMs without a fee. CCB conducted some
market research and have found that when they raise their ATM fee, they actually increase the
number of new checking account customers per day-the cross-price elasticity is positive. Non-
customers get tired of paying the fee so they become customers. However, as you raise ATM fees
you lose non-customer transactions at your ATMs. The non-customer demand for CCB ATM
transactions is given by the equation Q = 19,000 - 6,000P. Right now CCB handles 10,000 non-
customer ATM transactions per day at a fee of $1.50.
a. What is the own-price elasticity for ATM fees charged to non-customers? N At the current
ATM fee, should you raise or lower your ATM fees? Why?
b. What should your new ATM fee be if your marginal cost of…
Chapter 6 Solutions
MICROECONOMICS-ACCESS CARD <CUSTOM>
Ch. 6.1 - If when price rises by 4 percent, quantity...Ch. 6.1 - Prob. 2QCh. 6.1 - Prob. 3QCh. 6.1 - Prob. 4QCh. 6.1 - Prob. 5QCh. 6.1 - Prob. 6QCh. 6.1 - Prob. 7QCh. 6.1 - Prob. 8QCh. 6.1 - Prob. 9QCh. 6.1 - Prob. 10Q
Ch. 6 - Determine the price elasticity of demand if, in...Ch. 6 - A firm has just increased its price by 5 percent...Ch. 6 - When tolls on the Dulles Airport Greenway were...Ch. 6 - Prob. 4QECh. 6 - Prob. 5QECh. 6 - Prob. 6QECh. 6 - Prob. 7QECh. 6 - Economists have estimated the following...Ch. 6 - Prob. 9QECh. 6 - A newspaper recently lowered its price from 5.00...Ch. 6 - Once a book has been written, would an author...Ch. 6 - Prob. 12QECh. 6 - Prob. 13QECh. 6 - Suppose average movie ticket prices are 8.50 and...Ch. 6 - Which of the following producers would you expect...Ch. 6 - Prob. 16QECh. 6 - Prob. 17QECh. 6 - Prob. 18QECh. 6 - Prob. 19QECh. 6 - Prob. 20QECh. 6 - Prob. 21QECh. 6 - Prob. 22QECh. 6 - Prob. 1QAPCh. 6 - Prob. 2QAPCh. 6 - Prob. 3QAPCh. 6 - Prob. 4QAPCh. 6 - Prob. 5QAPCh. 6 - Price elasticity is not just a technical economic...Ch. 6 - Prob. 1IPCh. 6 - Prob. 2IPCh. 6 - Prob. 3IPCh. 6 - Prob. 4IPCh. 6 - Prob. 5IPCh. 6 - In 2004, Congress allocated over 20 billion to...Ch. 6 - In 2004, (Congress allocated over 20 billion to...Ch. 6 - Prob. 8IPCh. 6 - Prob. 9IPCh. 6 - Prob. 10IP
Additional Business Textbook Solutions
Find more solutions based on key concepts
Consider the cash flows from an investment project. (a) Compute the net present worth of the project at i = 10%...
Contemporary Engineering Economics (6th Edition)
Using the midpoint formula, calculate elasticity for each of the following changes in demand.
Principles of Economics (12th Edition)
Drought cuts the quantity of wheat grown by 2 percent. If the price elasticity of demand for wheat is 0.5, by h...
Foundations of Economics (8th Edition)
A case study in this chapter discusses the federal minimum-wage law. a. Suppose the minimum wage is above the e...
Principles of Economics, 7th Edition (MindTap Course List)
A typical discounted price of a AAA battery is 0.75. It is designed to provide 1.5 volts and 1.0 amps for about...
Engineering Economy (16th Edition) - Standalone book
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.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_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_forwardIn 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_forward
- Suppose Sally buys exactly five bars of English toffee each week, regardless of whether the toffee bars are regularly priced at 1 or on sale for 0.50. Based on this information, what is Sallys price elasticity of demand for English toffee in this price range? a. 0 b. 1 c. Infinity d. Cannot be determined.arrow_forward(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?arrow_forwardEvaluate the following statement: Along a downward-sloping linear demand curve, the slope and therefore the elasticity of demand are both 'constant.arrow_forward
- Prove that price elasticity of demand is not the same as the slope of a demand curve.arrow_forwardHelp me fast so that I will give Upvote.arrow_forwardyou sell two different goods : printer and toner catridges. the price elasticity of demand for the printer is -3.4, and you earn a revenue of Rm15000 per month from the good. you earn a revenue of Rm5000 per month from the toner catridges. the cross price elasticity of demand for both of the goods is -2.5. if you decide to decrease the price of the printer by 5%, calculate your new total revenue for both of the goods.arrow_forward
- C) You sell two different goods: printers and toner cartridges. The price elasticity of demand for the printers is -3.4, and you earn a revenue of RM15,000 per month from the good. You earn a revenue of RM5,000 per month from the toner cartridges. The cross-price elasticity of demand for both of the goods is -2.5 if you decide to decrease the price of the printers by 5%, calculate your new total revenues for both of the goods.arrow_forwardRefer to the table below to answer the questions. Use the mid-point formula. $4 10 B 9. 7 6 Demand 1 2 3 4 5 Q Number of gardenburgers 4.1) If the price of a gardenburger increases from RM8 to RM10, the price elasticity of demand equals 4.2) If the price of a gardenburger increases from RM6 to RM8, the price elasticity of demand equals 4.3) If the price of a gardenburger decreases from RM7 to RM6, the price elasticity of demand equals 4.4) If the price of a gardenburger decreases from RM9 to RM8, the price elasticity of demand equals 4.5) If the price of a gardenburger decreases from RM8 to RM7, the price elasticity of demand equals 4.6) If the price of a gardenburger increases from RM7 to RM9, the price elasticity of demand equals and demand is and demand is and the decrease results in a(n) in total revenue. and demand is and demand is and the increase results in a(n) in total revenue. Price 00arrow_forwardSuppose you own a bookstore where you currently sell 23 Harry Potter adventure novels per day at a price of $39 per book. However, if you were to reduce the price to $28, then you would sell 31 Harry Potter adventure novels per day. Using the midpoint formula, what is the price elasticity of demand for Harry Potter adventure novels? (Hint: Be sure to include a minus sign, and enter a real number rounded to two decimal places.) In this price range, the demand for Harry Potter adventure books isarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Sales Management | Sales management Process; Author: Educationleaves;https://www.youtube.com/watch?v=6tDfPoEOOoE;License: Standard youtube license