Question

Cough drop’s regular price is $3.80 and sells 810 bags. When price increases to $4.20, 790 bags are still sold. The revenue at the regular price is $3.80 * 810 = $ 3,078 and revenue at the higher price is $4.20 * 790 = $ 3,318

1)Increasing this item’s price made its revenue RISE/FALL

2)The above item’s price elasticity of demand is ELASTIC/INELASTIC

3) The above item’s price elasticity of demand has an absolute value LESS/GREATER than 1.0. The item’s price elasticity of demand is calculated to be:

Answer #1

1) RISE. When the price is increased from $3.8 to $4.2, the revenue goes up from $3,078 to $3,318.

2) INELASTIC: When the percentage change in demand is smaller than the percentage change in price, price elasticity is said to inelastic.

3) The formula to calculate price elasticity of demand is:

Usually, we take the absolute value of price elasticity because for most cases, price and demand move in opposite directions which means that -ve sign is always a given.

So at 0.23 price elasticity is less than 1, which means that demand doesn't change as rapidly as price.

Ant-acid’s regular jumbo size price is $8.20 and sells 980
bottles. When discounted to $7.80, 1020 bottles are sold. If
revenue at the regular price is $ 8,036 and the revenue at the
discounted price is $7,956
1)Discounting this item made its revenue RISE/FALL
2)The above item’s price elasticity of demand is
ELASTIC/INELASTIC
3)The above item’s price elasticity of demand has an absolute
value LESS/GREATER than 1.0. 6)The item’s price elasticity of
demand is calculated to be:

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...

A shop sells 20 hats per week at $10 each. When it increases the
price to $12, the number of hats sold falls to 15 per week. Which
of the following statements are correct?
1. When the price increases from $10 to $12, demand increases by
25%.
2. A 20% increase in the price causes a 25% fall in demand.
3. The demand for hats is inelastic.
4. The elasticity of demand is approximately 1.25.

(64)Suppose that the quantity of oranges sold increases
by 45 percent when the price of tangerines increases by 25 percent.
What is the coefficient of cross price elasticity of demand for
these fruits?
(a)2.5
(b)3.2
(c)1.8
(d)0.3
(65)Given the coefficient of cross price elasticity of
demand for the fruits in Q#64 above, which of the following
statements is true?
(a)They are complements
(b)Their demand curve is negatively sloped
(c)Their cross elasticity of demand is negative
(d)None of the above
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Suppose a firm sells 100 units when the price is $6, but sells
250 units when the price falls to $4.
1-Calculate the firm's revenue at each of the prices.
2-Calculate the price effect and the quantity effect.
3-Use the price effect and the quantity effect to determine
whether demand is elastic or inelastic over this range.
4-Verify your previous answer by calculating the elasticity of
demand using the midpoint formula.

When Vincent’s Produce increases the price of strawberries from
$4.75/pound to $5.25/pound, he finds that sales drop from 330
pounds/week to 310 pounds/week.
Calculate the price elasticity of demand for Vincent’s
strawberries.
Is demand elastic, inelastic or unit elastic?
Did Vincent’s revenue from strawberry sales increase, decrease
or stay the same?
Med rents surfboards on the big island of Hawaii. He’s been
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decreases the price, she attracts more customers. What can we
conclude?
Demand is elastic and Jan's revenue will increase.
We have insufficient information to make any statements about
elasticity.
Demand is inelastic
Demand is elastic
b).
If the cross-elasticity of demand for Good Q with respect to
Good Z is -1.9, then the goods are
complements
normal goods
substitutes
inferior goods
c).Assume that the demand for unskilled workers is...

6) The price elasticity of demand for new cars is 1.2. If
automobile manufacturers raise their price, then __________.
A) total revenue will fall.
B) total revenue will remain unchanged.
C) total revenue will increase.
D) total revenue will fall initially but eventually rise.
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A. 0
B. .83
C. 1.2
D. 2.1
E. none of the above.
15b. Is the price elasticity of demand elastic,
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15c. What was your original TR?
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5. Suppose that Bobo purchases 1 pizza per month when the price
is $19 and 3 pizzas per month when the price is $15. What is the
price elasticity of Bobo’s demand curve?
Multiple Choice
a.0.235
b.2.00
c.4.25
d.6.33
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is $40 and 4 times per month when the price is $50. What is the
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Multiple Choice
a.0.1
b.0.8
c.10.0
d.1.0
7....

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