Question

Elasticity Problems: Show your work includung units, if any 5. As incomes have risen by 20%,...

Elasticity Problems: Show your work includung units, if any

5. As incomes have risen by 20%, the quantity demanded of 60-inch TVs has risen by 30%. What is the income elasticity of demand? What kind of good is this?

6. As incomes have fallen by 10%, the quantity demanded of generic corn flakes has risen by 20%. What is the income elasticity of demand? What kind of good is this?

7. DishTV has lowered its prices by 10% and the subscription base for DirecTV fell 15%. What is the cross price elasticity of demand for DirecTV? How are these services related?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

(5) Income elasticity=%change in quantity demanded/%change in income

So income elasticity of 60 inch Tv =30/20=1.5. Since income elasticity is positive so 60 inch TV is a normal good.

(6) Income elasticity of generic corn flakes= 20/-10=-2. Since income elasticity is negative so generic corn flakes is an inferior good.

(7) cross price elasticity of directv = %change in demand of direcTV/%change in price of DishTV=-15/-10=1.5 . Since cross price elasticity is positive so DirecTV and DishTV are substitutes.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
• The price elasticity of demand is |-2| • The income elasticity of demand is -1.5...
• The price elasticity of demand is |-2| • The income elasticity of demand is -1.5 • The cross-price elasticity of demand between your good and a related good is -3.5 a. Describe what would happen to total revenue for your good if you raised your price by 10 % b. Describe what would happen to total revenue for your good if a recession lowered incomes by 10% c. Describe what would happen to total revenue for your good if...
1. For each of the following say either "positive," "negative," or "either." a. The (price) elasticity...
1. For each of the following say either "positive," "negative," or "either." a. The (price) elasticity of demand. b. The (price) elasticity of supply. c. The cross-price elasticity for substitutues. d. The cross-price elasticity for compliments. e. The income elasticity for a normal good. f. The income elasticity for an inferior good. 2. When the price of good X goes from $20 to $25, the quantity goes from 100 to 65. a. What is the elasticity of demand? b. Is...
Using the Midpoint method compute the elasticity in the following cases and explain your answers.   ...
Using the Midpoint method compute the elasticity in the following cases and explain your answers.    Price Quantity Demanded (Income = AED60,000) Quantity Demanded (Income = AED90,000) 50 2000 1500 75 1500 1000 1. Calculate the income elasticity of demand when income rises from AED 60,000 to AED90,000 at a price of AED 75. (1 Mark) 2. Due to COVID 19, the average price of a Jones the Grocer meal fell from AED100 to AED 80. As a result, Slim’s...
If the marginal cost of production of a good is a positively sloped function of the...
If the marginal cost of production of a good is a positively sloped function of the quantity supplied to the market and the price of the good is a negatively sloped function of the quantity demanded, In a monopoly market price there will always be a dead-weight loss compared to the result of a competitive market. In a competitive market, the long-run equilibrium quantity supplied and demanded will be the quantity at which long run marginal cost and price are...
QUESTION 36 The price elasticity of demand for Alpha personal computer is estimated to be -2.0....
QUESTION 36 The price elasticity of demand for Alpha personal computer is estimated to be -2.0. If the price of the computers decreases by 5%, what would be the expected percentage changes in the quantity demanded and in the total revenue for the company? a) Quantity demanded would decrease by 10% and total revenue would decreases by 5%. b) Quantity demanded would increase by 10% and total revenue would increases by 5%. c) Quantity demanded would decrease by 10% and...
A life-saving medicine without any close substitutes will tend to have a small elasticity of demand....
A life-saving medicine without any close substitutes will tend to have a small elasticity of demand. a large elasticity of demand. a small elasticity of supply. a large elasticity of supply. The price of a good rises from $8 to $12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the price elasticity of demand is 1/5. 1/2. 2. 5. A linear, downward-sloping demand curve is inelastic unit elastic. elastic. inelastic at some points,...
1) Using the midpoint method, the price elasticity of demand is determined to be about 0.85....
1) Using the midpoint method, the price elasticity of demand is determined to be about 0.85. If there is a 10% decrease in the quantity demanded of the product then what effect would this have on the price of the product? A decrease in the price of the product from $8.50 to $10 A 11.8% increase in the price of the product An increase in the price of the product from $8.50 to $10 2)The ________ is negative for complementary...
(60)A perfectly inelastic demand curve has an elasticity coefficient of: (a)1 (b)0.25 (c)∞ (d)None of the...
(60)A perfectly inelastic demand curve has an elasticity coefficient of: (a)1 (b)0.25 (c)∞ (d)None of the above Akal mn wahed Extra Credit Questions-Optional (61)If the percentage change in the quantity supplied of a good is less than the percentage change in price, price elasticity of supply is: (a)Inelastic (b)Perfectly inelastic (c)Elastic (d)Unitary elastic (62)If the percentage change in the quantity demanded of a good is equal to the percentage change in price, price elasticity of demand is: (a)Inelastic (b)Perfectly inelastic...
1-As we move up the demand curve, the price elasticity of demand * A) increases B)...
1-As we move up the demand curve, the price elasticity of demand * A) increases B) decreases C) becomes unitary D) does not change 2-If the price of lemonade increases relative to the price of grape juice, the demand for: * A) grape juice will decrease. B) grape juice will increase. C) lemonade will decrease. D) lemonade will increase. 3-An increase in price will result in no change in total revenue if: * A) the percentage change in price is...
1. If the demand for good X increases by 20% when income increases by 40%, we...
1. If the demand for good X increases by 20% when income increases by 40%, we can say that: a. income elasticity is 2, and the good is an inferior good b. income elasticity is 2, and the good is a normal good c. income elasticity is 1/2, and the good is a normal good d. income elasticity is 1/2, and the good is an inferior good 2. A monopoly has the following data: P=$10, MR = $6 MC =...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT