Question

3.

At the price of $20, the quantity demand of lawn hoses was 100. The price increased to $25, and the quantity demanded dropped to 95.

[ The two points on the demand curve are Point A: (100, $20) and Point B (95, $25).]

a) Calculate the price elasticity of demand for the hoses. ____________

b) Is it elastic, inelastic or unitary elastic? _____________

- What happens to the total revenue in this case?_______________
- What would happen to the total revenue if you
*decreased*the price of this merchandise? _____________

4. (4 pts)

At the price of $20, the quantity demand of decorative pots was 100. The price increased to $25, and the quantity demand dropped to 75.

[ The two points on the demand curve are Point A: (100, $20) and Point B (75, $25).]

- Calculate the price elasticity of demand for this merchandise. ____________

- Is it elastic, inelastic or unitary elastic? ____________

- What happens to the total revenue in this case?_______

- What would happen to the total revenue if you
*decreased*the price of this merchandise? _________________

Answer #1

**3)**

**a)** %change in quantity demanded = [(95 - 100) /
100] * 100 = -5%

%change in price = [(25 - 20) / 20] * 100 = 25%

Elasticity of demand = %change in quantity demanded / %change in price = [(-5%) / 25%] = -0.2

Wecan ignore negative sign which give elasticity = 0.2

**b)** As %change in quantity demanded < %change
in price, it says that consumers are not responsive to change in
price making demand inelastic.

**c)** As demand is inelastic and price rises,
total revenue rises .

**d)** If you decrease the price of it, total
revenue will fall as consumer will not change their quantity
demanded by much even if price rises or fall.

A price change causes the quantity demanded for a good to
increase by 20 percent and the total revenue of that good decreases
by 15 percent. What can you say about the price elasticity of
demand at this point.
It's elastic
It's inelastic
It's unitary elastic
It's perfectly elastic

1. When elasticity of demand is equal to one and the change in
the quantity demanded and the change in price are exactly
proportional. This type of elasticity is described as ________.
A. elastic
B. inelastic
C. unitary elastic
2. What happens to total revenue (TR) if the price rises on a
product with demand that is price elastic?
A. Total revenue will rise.
B. Total revenue will remain the same.
C. Total revenue will fall.

1.If price rises by 20% and quantity demanded of rice falls by
100 pounds, the elasticity of demand is : (1 point)
a. greater than 1
b. equal to -5
c. equal to -20
d. cannot be determined without additional information.
2.If quantity supplied responds only slightly to a change in
price, then: (1 point)
a. Supply is elastic
b. An increase in price will shift the supply curve to a large
extent
c. Supply is inelastic
d. Supply is...

When the price of good "X" increases 20 percent (+20%), Harry
decreases his quantity demanded of "X" by 25 percent while Meghan
decreases her quantity demanded of "X" by 15 percent. Harry's
demand for good "X" is (relatively inelastic / unitary elastic /
relatively elastic) and Meghan's demand for good "X" is (relatively
inelastic / unitary elastic / relatively elastic).
A. Relatively inelastic; relatively
inelastic.
B. Relatively inelastic; relatively
elastic.
C. Unitary elastic; relatively
elastic.
D. Relatively elastic; relatively
elastic.

3. The quantities of Uber rides that Portland residents are
willing to buy is represented by the following demand schedule:
Demand for Uber rides
Price
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Quantity demanded
(per day)
100
90
80
70
60
50
40
30
Use the total revenue test to determine whether demand is
elastic, inelastic or unitary elastic between each of the prices
(i.e. use the change in TR to find Ed) Show your work.
Explain in two...

a. How much would the firm’s revenue change if it lowered price
from $12 to $10? Is demand elastic or inelastic in this range?
Revenue change: $ -3.66 -3.66 Incorrect Demand is elastic Correct
in this range b. How much would the firm’s revenue change if it
lowered price from $4 to $2? Is demand elastic or inelastic in this
range? Revenue change: $ 20 20 Incorrect Demand is inelastic
Correct in this range c. What price maximizes the firm’s...

A price change causes the quantity demanded of a good to
increase by 2 percent, while the total revenue of that good
decreased by 8 percent. Over this price range is the demand for
this good elastic, inelastic or unitary elastic? Could anyone
explain, please?

Carefully explain (using diagrams) why is the point of
intersection between supply and demand for a product point of
equilibrium price and quantity and no other point. What happens if
price is above or below the point of equilibrium and how is the
equilibrium price and quantity restored?
What is price elasticity of demand?
What determines whether a product’s demand is elastic, inelastic,
unitary elastic, perfectly elastic and perfectly inelastic? What is
mid-point formula to determine the elasticity of demand...

For the following question: At a price of $18, 100 are demanded
At a price of $12, 300 are demanded At a price of $6, 500 are
demanded.
25. _____ According to the above information, if the price
decreased from $18 to $6, what would happen to total revenue: A.
total revenue would increase by $1,200 and demand would be elastic
B. total revenue would increase by $800 and demand would be elastic
C. total revenue would decrease by $1,200...

16. At a price of $4, quantity demanded is 100; and at a price
of $6, quantity demanded is 120. Using the midpoint formula, the
price elasticity of demand is ________ and demand is ________.
A) 0.1; inelastic
B) 0.45; inelastic
C) -2.2; elastic
D) -10; elastic

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