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 14QE

Suppose average movie ticket prices are $8.50 and attendance is 1.2 billion. The price of tickets rises to $9.50 and attendance to 1.4 billion. (LO6-3)

  1. a. What happened to total revenue?
  2. b. If you were to estimate elasticity from these figures, what would your estimate be?
  3. c. What provisos would you offer about your estimate of elasticity?
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You run a store selling large bear dolls. You estimate that the price elasticity of demand for these dolls is -3.1. Given this elasticity, if you were to raise your price by 1%, by what percent would quantity demanded fall? (Note: please give your answer as a positive number, as in, if quantity demanded falls by 5 percent, enter your answer as '5'.)
Answer the following to determine your knowledge of elasticity: (1) Suppose you are the chief executive officer of a firm, and you have been planning to reduce your prices. Your marketing manager reports that the price elasticity of demand for your product is 0.65. How will this news affect your plans?
Suppose the price elasticity of demand for the market of mobile phones is 0.90.   If all mobile-phone companies simultaneously increased their prices, will total revenue in the industry increase or decrease?  If a single mobile-phone company increased its price, would you expect the company’s total revenue to increase or decrease? Explain.  Suppose that the price in the market is initially $10 and the quantity demanded is 100 units. If the price in this market increases by 10%, what will be the percentage change in the quantity demanded?  no copied answers please
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