MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781264207718
Author: Colander
Publisher: MCG CUSTOM
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Chapter 6, Problem 12QE

(a)

To determine

Determine whether the states have achieved the maximum revenue or not.

(b)

To determine

Identify the best recommendations for each state to achieve the maximize revenue. 

(c)

To determine

Identify the best recommendations for each state to achieve the maximize revenue. 

(d)

To determine

Illustrate graphically the linear demand curve. 

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Elasticity in the real world—sort of. The managers of a scholarly journal that I edit were thinking of raising the subscription prices. We used to charge individuals $32 for four issues per year and libraries $52 for the same. The managers proposed raising the prices to $45 and $75, respectively. My feeling was that these increases were too small, especially since the prices of substitutes (scholarly journals of a quality similar to ours) were much higher. I suggested that we charge $50 and $85, respectively. I believed that was more sensible, since the demand is quite inelastic over this price range, so with a larger price increase our total revenue would rise further. Apparently the managers agreed, and we raised our prices by the larger amount. Next year our revenue rose, suggesting that my guess about the elasticity of demand was correct. Why do you think the journal charges different prices to libraries?   Do individuals have a higher or lower elasticity of demand than libraries?…
Suppose a movie theater determines it can charge different prices to patrons who go to weekday matinees and people who attend evening and weekend shows. The movie theater's goal is to increase total revenue. See Hint The price elasticity of demand for weekend and evening patrons is -0.50, and the price elasticity of demand for matinee moviegoers is -2.80. Based on the price elasticity of demand for each group of people, how should the movie theater adjust its prices? Choose one: O A. Raise the price for matinee moviegoers, and keep the price the same for weekend and evening patrons. O B. Lower the price for matinee moviegoers, and raise the price for weekend and evening patrons. O C. Lower the price for matinee moviegoers, and keep the price the same for weekend and evening patrons. O D. Raise the price for matinee moviegoers, and lower the price for weekend and evening patrons.
The New York City Parks Department learned an important lesson about elasticity when it decided to increase the price of using city-owned tennis courts. Residents used to pay $100 for a seasonal permit, which allowed them to play on any city-owned court. City managers figured that if they raised the price to $200, they would sell nearly as many permits, while increasing their revenue. However, the price increase led the quantity of permits demanded to drop from 2,000 to 1,000. Calculate the change in revenue for the City of New York.
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Elasticity of Demand- Micro Topic 2.3; Author: Jacob Clifford;https://www.youtube.com/watch?v=HHcblIxiAAk;License: Standard YouTube License, CC-BY