Question

1.) Suppose if the price of a good is $12, the quantity demanded is 50 units;...

1.) Suppose if the price of a good is $12, the quantity demanded is 50 units; when the price is $10, the quantity demanded is 100 units. Use the midpoint approach to compute the price elasticity of demand. Is demand at this point relatively responsive or relatively unresponsive to price changes?

2.) For this exercise you will need to first build a graph to these specifications: Draw a downward sloping demand curve with vertical intercept (0,4) and horizontal intercept (8,0). Label the price above which the demand is always elastic. Label the portion of the curve at which a decrease in price will lead to increased revenue. If the price is currently $3, will revenue rise or fall if price drops to $2?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Question 1

Calculate the price elasticity of demand -

P1 = $12

Q1 = 50 units

P2 = $10

Q2 = 100

Ed = -3.67

The price elasticity of demand as per midpoint approach is -3.67.

The value of price elasticity of demand is greater than 1. When value of price elasticity of demand is greater than 1, demand is said to be elastic.

So, at this point demand is elastic.

When demand is elastic, quantity demanded is relatively responsive to the price changes.

Thus, at this point, demand is relatively responsive to price changes.

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
16. At a price of $4, quantity demanded is 100; and at a price of $6,...
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
1. When elasticity of demand is equal to one and the change in the quantity demanded...
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 demand is inelastic, the percentage change in price is greater than the resulting percentage...
1. If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded a. True b. False 2. ​Price elasticity is 1 at the midpoint of a linear downward-sloping demand curve. a. True b. False
A price change causes the quantity demanded for a good to increase by 20 percent and...
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.If price rises by 20% and quantity demanded of rice falls by 100 pounds, the elasticity...
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...
Price Quantity Demanded $0 50 $2 40 $4 30 $6 20 $8 10 a. Using the...
Price Quantity Demanded $0 50 $2 40 $4 30 $6 20 $8 10 a. Using the midpoint method, calculate the price elasticity of demand between $4 and $6? b. Between two quantities of 30 to 20, is demand elastic, inelastic, or unit elastic? Show the work.
A price change causes the quantity demanded of a good to increase by 15%, while the...
A price change causes the quantity demanded of a good to increase by 15%, while the total revenue of that good increases by 10%. True or False: The demand curve is elastic in this region. True False
Consider the following combinations of price and quantity demanded for an unnamed good. These questions ask...
Consider the following combinations of price and quantity demanded for an unnamed good. These questions ask you to perform several percentage change an elasticity calculations. When calculating percentage change, some questions ask you to use the traditional formula and some ask you to use the midpoint formula. For clarity, these two formulas are given below. The values you calculate should be between -100 and 100 (not -1 to 1). Please include the sign (if negative) in all of your responses....
b) When the price of Good A is $27, the quantity demanded of Good B is...
b) When the price of Good A is $27, the quantity demanded of Good B is 1,200 units. When the price of Good A falls to $23 the quantity demanded of Good B falls to 800 units. i. Calculate the cross elasticity of demand ii. Are the goods substitutes or complements? Explain your choice. c. Explain how cross elasticity of demand is used. d. Explain how income elasticity of demand is used.
When the price of good "X" increases 20 percent (+20%), Harry decreases his quantity demanded of...
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.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT