The usefulness of the concepts of price and income elasticities of demand . Concept Introduction: Price Elasticity of Demand : The degree of responsiveness of the quantity demanded in response to the change in the price of the product. Income Elasticity of Demand: The degree of responsiveness of the quantity demanded in response to the change in the income level of the consumers.

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Answer 1

Question

Chapter 6, Problem aWYWL

To determine

To Explain:

The usefulness of the concepts of price and income elasticities of demand.

Concept Introduction:

Price Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the price of the product.

Income Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the income level of the consumers.

Expert Solution & Answer

Explanation of Solution

The concept of price elasticity of demand is significantly useful for business people, farmers, laborers, and government policymakers. Business firms take decisions on product pricing based on their price elasticities. Input prices, especially the wages of the labor are determined by the elasticities of their outputs. The lower is the elasticity of demand of output, the higher is their wages. In case of international trade, the concept of elasticity finds many applications. It helps the government to regulate taxes on imports, assists in the determination of tariffs, or in issuing exemptions and monitoring the value of the currency. In the domestic front also, the concept of elasticity assists the government policy-makers to decide on imposing of taxes on goods and services.

The income elasticity of demand helps in classifying goods into categories such as normal goods (when income elasticity is positive) and inferior goods (when income elasticity is negative). Based on the value of income elasticity, normal goods can be again classified as luxury goods and necessities. These classifications are important for any business decisions. Income elasticities are also used to know about the stages of the business cycle and to forecast demand.

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Tasks Exercise 1 Assess the following functions: 1. f(x)= x2+6x+2 2.f '(x)=10x-2x2+5 a. Find the stationary points. (5 marks) b. Determine whether the stationary point is a maximum or minimum. (5 marks) c. Draw the corresponding curves (5 marks)

Problem 2: The sales data over the last 10 years for the Acme Hardware Store are as follows: 2003 $230,000 2008 $526,000 2004 276,000 2009 605,000 2005 328,000 2010 690,000 2006 388,000 2011 779,000 2007 453,000 2012 873,000 1. Calculate the compound growth rate for the period of 2003 to 2012. 2. Based on your answer to part a, forecast sales for both 2013 and 2014. 3. Now calculate the compound growth rate for the period of 2007 to 2012. 1. Based on your answer to part e, forecast sales for both 2013 and 2014. 5. What is the major reason for the differences in your answers to parts b and d? If you were to make your own projections, what would you forecast? (Drawing a graph is very helpful.)

Answer 2

Question

Chapter 6, Problem aWYWL

To determine

To Explain:

The usefulness of the concepts of price and income elasticities of demand.

Concept Introduction:

Price Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the price of the product.

Income Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the income level of the consumers.

Expert Solution & Answer

Explanation of Solution

The concept of price elasticity of demand is significantly useful for business people, farmers, laborers, and government policymakers. Business firms take decisions on product pricing based on their price elasticities. Input prices, especially the wages of the labor are determined by the elasticities of their outputs. The lower is the elasticity of demand of output, the higher is their wages. In case of international trade, the concept of elasticity finds many applications. It helps the government to regulate taxes on imports, assists in the determination of tariffs, or in issuing exemptions and monitoring the value of the currency. In the domestic front also, the concept of elasticity assists the government policy-makers to decide on imposing of taxes on goods and services.

The income elasticity of demand helps in classifying goods into categories such as normal goods (when income elasticity is positive) and inferior goods (when income elasticity is negative). Based on the value of income elasticity, normal goods can be again classified as luxury goods and necessities. These classifications are important for any business decisions. Income elasticities are also used to know about the stages of the business cycle and to forecast demand.

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Answer 3

Question

Chapter 6, Problem aWYWL

To determine

To Explain:

The usefulness of the concepts of price and income elasticities of demand.

Concept Introduction:

Price Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the price of the product.

Income Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the income level of the consumers.

Expert Solution & Answer

Explanation of Solution

The concept of price elasticity of demand is significantly useful for business people, farmers, laborers, and government policymakers. Business firms take decisions on product pricing based on their price elasticities. Input prices, especially the wages of the labor are determined by the elasticities of their outputs. The lower is the elasticity of demand of output, the higher is their wages. In case of international trade, the concept of elasticity finds many applications. It helps the government to regulate taxes on imports, assists in the determination of tariffs, or in issuing exemptions and monitoring the value of the currency. In the domestic front also, the concept of elasticity assists the government policy-makers to decide on imposing of taxes on goods and services.

The income elasticity of demand helps in classifying goods into categories such as normal goods (when income elasticity is positive) and inferior goods (when income elasticity is negative). Based on the value of income elasticity, normal goods can be again classified as luxury goods and necessities. These classifications are important for any business decisions. Income elasticities are also used to know about the stages of the business cycle and to forecast demand.

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Answer 4

Question

Chapter 6, Problem aWYWL

To determine

To Explain:

The usefulness of the concepts of price and income elasticities of demand.

Concept Introduction:

Price Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the price of the product.

Income Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the income level of the consumers.

Expert Solution & Answer

Explanation of Solution

The concept of price elasticity of demand is significantly useful for business people, farmers, laborers, and government policymakers. Business firms take decisions on product pricing based on their price elasticities. Input prices, especially the wages of the labor are determined by the elasticities of their outputs. The lower is the elasticity of demand of output, the higher is their wages. In case of international trade, the concept of elasticity finds many applications. It helps the government to regulate taxes on imports, assists in the determination of tariffs, or in issuing exemptions and monitoring the value of the currency. In the domestic front also, the concept of elasticity assists the government policy-makers to decide on imposing of taxes on goods and services.

The income elasticity of demand helps in classifying goods into categories such as normal goods (when income elasticity is positive) and inferior goods (when income elasticity is negative). Based on the value of income elasticity, normal goods can be again classified as luxury goods and necessities. These classifications are important for any business decisions. Income elasticities are also used to know about the stages of the business cycle and to forecast demand.

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Answer 5

Chapter 6, Problem aWYWL

To determine

To Explain:

The usefulness of the concepts of price and income elasticities of demand.

Concept Introduction:

Price Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the price of the product.

Income Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the income level of the consumers.

Expert Solution & Answer

Explanation of Solution

The concept of price elasticity of demand is significantly useful for business people, farmers, laborers, and government policymakers. Business firms take decisions on product pricing based on their price elasticities. Input prices, especially the wages of the labor are determined by the elasticities of their outputs. The lower is the elasticity of demand of output, the higher is their wages. In case of international trade, the concept of elasticity finds many applications. It helps the government to regulate taxes on imports, assists in the determination of tariffs, or in issuing exemptions and monitoring the value of the currency. In the domestic front also, the concept of elasticity assists the government policy-makers to decide on imposing of taxes on goods and services.

The income elasticity of demand helps in classifying goods into categories such as normal goods (when income elasticity is positive) and inferior goods (when income elasticity is negative). Based on the value of income elasticity, normal goods can be again classified as luxury goods and necessities. These classifications are important for any business decisions. Income elasticities are also used to know about the stages of the business cycle and to forecast demand.

Answer 6

Chapter 6, Problem aWYWL

To determine

To Explain:

The usefulness of the concepts of price and income elasticities of demand.

Concept Introduction:

Price Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the price of the product.

Income Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the income level of the consumers.

Expert Solution & Answer

Explanation of Solution

The concept of price elasticity of demand is significantly useful for business people, farmers, laborers, and government policymakers. Business firms take decisions on product pricing based on their price elasticities. Input prices, especially the wages of the labor are determined by the elasticities of their outputs. The lower is the elasticity of demand of output, the higher is their wages. In case of international trade, the concept of elasticity finds many applications. It helps the government to regulate taxes on imports, assists in the determination of tariffs, or in issuing exemptions and monitoring the value of the currency. In the domestic front also, the concept of elasticity assists the government policy-makers to decide on imposing of taxes on goods and services.

The income elasticity of demand helps in classifying goods into categories such as normal goods (when income elasticity is positive) and inferior goods (when income elasticity is negative). Based on the value of income elasticity, normal goods can be again classified as luxury goods and necessities. These classifications are important for any business decisions. Income elasticities are also used to know about the stages of the business cycle and to forecast demand.

Answer 7

Chapter 6, Problem aWYWL

To determine

To Explain:

The usefulness of the concepts of price and income elasticities of demand.

Concept Introduction:

Price Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the price of the product.

Income Elasticity of Demand:

The degree of responsiveness of the quantity demanded in response to the change in the income level of the consumers.

Answer 8

Expert Solution & Answer

Explanation of Solution

The concept of price elasticity of demand is significantly useful for business people, farmers, laborers, and government policymakers. Business firms take decisions on product pricing based on their price elasticities. Input prices, especially the wages of the labor are determined by the elasticities of their outputs. The lower is the elasticity of demand of output, the higher is their wages. In case of international trade, the concept of elasticity finds many applications. It helps the government to regulate taxes on imports, assists in the determination of tariffs, or in issuing exemptions and monitoring the value of the currency. In the domestic front also, the concept of elasticity assists the government policy-makers to decide on imposing of taxes on goods and services.

The income elasticity of demand helps in classifying goods into categories such as normal goods (when income elasticity is positive) and inferior goods (when income elasticity is negative). Based on the value of income elasticity, normal goods can be again classified as luxury goods and necessities. These classifications are important for any business decisions. Income elasticities are also used to know about the stages of the business cycle and to forecast demand.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 6 - Prob. aWYWL Ch. 6 - Prob. bWYWL Ch. 6 - Prob. cWYWL Ch. 6 - Prob. dWYWL Ch. 6 - Prob. 1QFT Ch. 6 - Prob. 2QFT Ch. 6 - Prob. 3QFT Ch. 6 - Prob. 4QFT Ch. 6 - Prob. 1P Ch. 6 - Prob. 2P

Explanation of Solution

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Chapter 6 Solutions