Question

All questions must be answered in details ELASTICITY

3. How responsive are your grades to a change in the amount of studying you do? For example, if you increased your study time by 25%, how would your grades respond? State these estimates as elasticities. Are your estimates high or low? Would it be worth your while to study more for each class? Explain.

4. Jumping Joe’s Night Club has found that when they offer half price admission to the club on Wednesday nights (when business is typically slow), their total revenue rises. (a) Is their demand elastic? Explain. (b) Is it a good idea for them to continue with this promotion? Why?

5. Absolut Vodka ran the same advertising campaign for about 20 or 30 years. What must the company have believed to be its advertising elasticity of demand? Explain.

7. The elasticity of demand for Dave’s Famous is Pizza is 2.6. Dave is considering raising pizza prices by 20%. Is this a good idea? What will happen to his sales? His total revenue? Explain.

Answer 1

3.

My grades are responsive and sensitive to the time invested on studies. It means that when study time increases by 25%, then grades improve by 35 %. It means that grades are highly responsive to the study time given.

Here, elasticity = % increase in grades/% increase in study times

Elasticity = 35%/25% = 1.4

Here, elasticity is greater than 1, it means that grades and relatively elastic in nature.So, estimate of elasticity are high and it is worth to give more time on studies and in the class so that grades improve.

5.

Company might have observed that advertising campaign has lost its impact. So, advertising elasticity has decreased. It means that impact of advertising decreased and now, less number of demand increases with the same level of advertising expenses.

Pl. repost other unanswered questions for their proper answers!