Question

If Samsung cuts the price of its 1 terabyte USB flash drive from $120 to $90...

If Samsung cuts the price of its 1 terabyte USB flash drive from $120 to $90 and, as a result, its daily quantity demanded goes up from 32,000 to 48,000 units, then what would be the price elasticity of demand for this product? Provide the full interpretation of this calculated price elasticity of demand coefficient from consumer and economic standpoints.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer : P (Changes in price) = P2 - P1 = 90 - 120 = - 30

Q (Changes in quantity) = Q2 - Q1 = 48000 - 32000 = 16000

Here P1 (old price) = $120 and Q1 (old quantity) = 32,000

P2 (new price) = $90 and Q2 (new quantity) = 48,000

Price elasticity of demand (||Ep||) = (Q / P) * (P1 / Q1)

=> ||Ep|| = [16000 / (- 30)] * (120 / 32000)

=> ||Ep|| = 2

Therefore, here the price elasticity of demand is 2. As here the price elasticity of demand is greater than 1 hence the demand is elastic.

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 table below shows monthly individual consumer demand schedule for gasoline. Without calculating the price elasticity...
The table below shows monthly individual consumer demand schedule for gasoline. Without calculating the price elasticity of demand coefficients find out on which portion of the curve demand is elastic and on which portion it is inelastic. Prove the answers with corresponding calculations in the blank table column below (5 points). Points Price/gallon ($) Qd (gallons) Corresponding Calculations A 6 20 B 5 38 C 4 54 D 3 72 E 2 95 F 1 120 Portion AB (underline the...
If the quantity demanded decreases by %15 and the price goes from 1.25 to 1.75 what...
If the quantity demanded decreases by %15 and the price goes from 1.25 to 1.75 what is the elasticity of demand? Is it elastic or inelastic? If the price goes down by 20% and the quantity sold increases from 80 to 120 units what is the elasticity of demand? Is it elastic or inelastic?
Assume that, for a particular demand curve, when price rises from $120 to $150, total revenue...
Assume that, for a particular demand curve, when price rises from $120 to $150, total revenue falls from $6,000 to $4,500. a. Based on this information, what is the quantity demanded at each price. b. Without calculating the coefficient of elasticity, is demand over this range elastic or inelastic? How do you know
4. a) On Tuesday, price and quantity demanded are $7 and 120 units, respectively. A week...
4. a) On Tuesday, price and quantity demanded are $7 and 120 units, respectively. A week later, price and quantity demanded are $6 and 150 units, respectively. What is the price elasticity of demand between the price of $7 and the price of $6? Use both the mid-point formula method and the percentage change method. b) The numbers from both methods are a bit different but their interpretation is the same. Interpret this elasticity. (i.e. is it elastic or inelastic...
The price of a new portable CD player falls from $100 to $90. The quantity of...
The price of a new portable CD player falls from $100 to $90. The quantity of CD players demanded rises from 15,000 per year to 20,000 per year. Use the midpoint formula to calculate the price elasticity of demand for portable CD players. Is the demand elastic, inelastic, or unit elastic?
1. The following data is from the demand for chocolate cookies: Producer reduces the price of...
1. The following data is from the demand for chocolate cookies: Producer reduces the price of some cookies from 12 to 10 cents. Find out that the quantities sold increased from 210 to 250 units: a) Calculate the price elasticity of cookies. b) Present the graph; Indicate if it is Price Elasticity of Demand or Supply. c) if it is elastic, inelastic or unitary. d) If the price elasticity coefficient in varieties is (- 3.0). What happens if I lower...
1. The following data is from the demand for chocolate cookies: Producer reduces the price of...
1. The following data is from the demand for chocolate cookies: Producer reduces the price of some cookies from 12 to 10 cents. Find out that the quantities sold increased from 210 to 250 units: a) Calculate the price elasticity of cookies. b) Present the graph; Indicate if it is Price Elasticity of Demand or Supply. c) if it is elastic, inelastic or unitary. d) If the price elasticity coefficient in varieties is (- 3.0). What happens if I lower...
1. If the price decreases by 4 percent. As a result, the quantity demanded increases by...
1. If the price decreases by 4 percent. As a result, the quantity demanded increases by 12 percent. The price elasticity of demand is………... 2. What is the relationship between elasticity and revenue? 3. A 7 percent reduction in the price of a product has zero effect on the dollar amount of consumer expenditure on the product. The price elasticity of demand is……… 4. What does the price elasticity of demand coefficient measures? 5. What is characteristic of the demand...
2.) For a certain good, when the good’s price falls from $22 to $20, its quantity...
2.) For a certain good, when the good’s price falls from $22 to $20, its quantity demanded rises from 2,000 to 2,200 units. Given this information, find the price elasticity of demand two different ways. First, use the elasticity of demand formula. Second, use the total revenue test. You must use both methods. show all work for credit.
Suppose an office supply store increased its price of file folders from $.79/box to $.99/box and...
Suppose an office supply store increased its price of file folders from $.79/box to $.99/box and the quantity demanded decreased from 85 boxes/month to 83 boxes/month. What is the price elasticity of demand for file folders? Tell whether the demand is elastic, unit elastic or inelastic. What happens to the total revenue generated for the office supply store as a result of the price increase, and how does it show the relationship between elasticity and total revenue?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT