Microeconomics
2nd Edition
ISBN: 9781259813337
Author: KARLAN, Dean S., Morduch, Jonathan
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter C, Problem 4PA
Use the demand schedule in Table CP-1 to answer the following questions. Use the mid-point method in your calculations.
- What is the
price elasticity of demand for a price change from $4 to $8? - What is the price elasticity of demand for a price change from $8 to $16?
- What is the price elasticity of demand for a price change from $20 to $24?
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Use the midpoint formula to calculate the price elasticity of
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CXIIS
Price (dollars per cone)
4.00-
3.75-
3.50-
3.25-
3.00-
2.75-P₁
2.50+
2.25-
2.00-
1.75-P2
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1.25-
1.00-
0.75
0.50
0.25
0.00+
0.0
10.0
A
B
D₂
C
25
:35
20.0 30.0 40.0
Quantity (cones per day)
D₁
O
0
o
O
OF
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- On Tuesday, the price and quantity demanded are 7 and 120 units, respectively. Ten days later, the price and quantity demanded are 6 and 150 units, respectively. What is the price elasticity of demand between the 7 and 6 prices?arrow_forwardUsing the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.arrow_forwardSuppose a movie theater raises the price of popcorn 10 percent, but customers do not buy any less popcorn. What does this tell you about the price elasticity of demand? What will happen to total revenue as a result of the price increase?arrow_forward
- What are the major determinants of a products price elasticity of demand? Studies indicate that the demand for Florida oranges, Bayer aspirin, watermelons, and airfares to Europe are elastic. Why?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_forwardJills Sausage Dog Stand projects the following demand for Jills sausage dogs: a. Calculate the price elasticity of demand between 2 and 4. Is demand in this range elastic or inelastic? b. Calculate the price elasticity of demand between 4 and 6. Is demand in this range elastic or inelastic?arrow_forward
- Plot the price and quantity data given in the demand schedule of exercise 1. Put price on the vertical axis and quantity on the horizontal axis. Indicate the price elasticity value at each quantity demanded. Explain why the elasticity value gets smaller as you move down the demand curve.arrow_forwardConsider the following supply schedule: What is the price elasticity of supply between a. P = 10 and P = 8? b. P = 8 and P = 6? c. P = 6 and P = 4? d. P = 4 and P = 2? e. P = 2 and P = 0?arrow_forwardWhat does a price elasticity of demand of 0.39 mean?arrow_forward
- What is the formula for line cross-price elasticity of demand?arrow_forwardIf the elasticity of demand for hamburgers equals 21.5 and the quantity demanded equals 40,000, predict what will happen to the quantity demanded of hamburgers when the price increases by 10 percent. If the price falls by 5 percent, what will happen?arrow_forwardEstimates 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_forward
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