MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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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.
Chapter 6 Solutions
MICROECONOMICS
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
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