Question

The retail price of a new phone is $150 and the quantity demanded is 1,000,000 units. If the price of the device increases to $200, the quantity demanded is 600,000 units. What is the price elasticity of the phone? Interpret the answer in one sentence.

Calculate the variable cost per unit of a microwave, if the fixed cost of the company is $5 million, selling price per unit is $100, and breakeven point is 62,500 units.

Answer #1

Q1. | |||||

Increase in price = 200-150 = 50 | |||||

% increase in price = 50/150 = 33.33% | |||||

Decreasse in Qty demanded = 600000-1000000 = -400000 | |||||

% decrease in Qty = -400000/1000000 = -40% | |||||

Price elasticity of demand = % change in Qty / % change in price | |||||

( -40% /33.33%) = - 1.20 | |||||

Price elasticity of demand = (1.20) | |||||

Q2. | |||||

CM per unit = Fixed cost / Break even units | |||||

5000,000 / 62500 =80 perr unit | |||||

VC per unit = Selling price - CM per unit | |||||

100-80 = 20.00 per unit | |||||

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...

Product X is currently selling at a retail price of $10.99.
Retail margins on the product are 40%, while wholesalers take a 15%
margin. Product X and its competitors sell at total of 200 million
unites annually. Product X has 35% of this market.
Variable manufacturing costs for Product X are $3.10 per unit.
Fixed manufacturing costs are $700,000.
The advertising budget for Product X is $4,500,000. Product
manager's salary and expenses total $85,000. Sales are paid
entirely by a...

When the price of Milo increases from RM2 to RM3, the quantity
demanded decreases from 200 to 150 glasses per month. The demand
for Nescafe increases from 50 to 100 glasses per month. (a)
Calculate the price elasticity of demand using the midpoint
formula. [10 marks] (b) If the price of Milo decreases, what will
happen to the total revenue of Milo? Explain. [8 marks] (c)
Calculate the cross elasticity of demand between Milo and Nescafe.
Based on the answer,...

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)....

When the price of doodads falls from $16 to $10 the quantity of
doodads demanded rises from 150 to 160 units.
a) Compute and categorize the elasticity of demand of
doodads.
b) Interpret the number you calculated in part (a) for the
elasticity of demand for doodads.
c) If the government placed an excise tax on doodads, who would
pay the majority of that tax: consumers or firms? Explain verbally
(no graph required).

Exhibit 4-9
Price of Good X
Quantity
Demanded
Quantity
Supplied
$10
220
110
11
200
150
12
180
180
13
150
210
14
120
240
15
80
290
Refer to Exhibit 4-9. Suppose that the government imposes a price
ceiling at a price of $11. How many fewer units would be exchanged
with the price ceiling than in a free market?

Price elasticity of demand is a measure of how responsive a
change in quantity demanded is to a change in:
Question 32 options:
interest rate.
price.
consumer preferences.
supply.
Question 33 (10 points)
The _______ is the amount by which an additional unit of
activity increases its cost.
Question 33 options:
average cost.
marginal benefit.
marginal cost.
average profit.
Question 34 (10 points)
The Inverse Elasticity Rule states:
Question 34 options:
the lower the elasticity, the lower the price.
the...

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...

Determine the breakeven suggested retail price for a
manufacturer’s new consumer product (CP). The CP has a total
cost per unit (TFC + TVC +NR / Units) of $32.00 based on the
projected first year sales of 100,000 units. The manufacturer’s
wholesale broker receives a 20% commission and the retail channel
members utilize “keystoning” which is a 50% markup on
selling.

37)
Price per Constant-
Quality of X
Quantity of
X Demanded
per Time Period
Quantity of
X Supplied
per Time Period
$10
0
150
8
20
120
6
40
90
4
60
60
2
80
30
0
100
0
Based on the table above, if other influences remain constant and
the market is free to adjust, a stable equilibrium price will be
established at
Select one:
a. $4.
b. $6.
c. $8.
d. $2.
A shortage will occur when
Select...

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