Question

Elasticity in the Breakfast Cereal Industry Recently, Cotterill and Haller found that the price p of the breakfast cereal Grape Nuts was related to the quantity x sold by the equation x = Ap^−2.0711, where A is a constant. Find the elasticity of demand and explain what it means.

Answer #1

Suppose a monopolist faces the constant price elasticity demand
curve:
p = Qε
where ε < 0. The monopolist has a constant marginal cost of
c.
a.
If ε < -1, can you determine what price and quantity will
the monopolist set? Explain.
b.
If 0 > ε > -1, what is the price and quantity the
monopolist will set?

1.Suppose a study found that the price elasticity of
demand for cigarettes in Zambia is -0.4. If a pack of cigarettes
currently costs K8 and the government wants to reduce smoking by 20
percent,
a.By how much should the government increase the price?
b.What will be the new price level?
2. Zambian Breweries sells its products in Zambia and
three neighboring countries. Data collected from 2010 to 2018 shows
that the company produced 300,000 barrels of beer annually. During
this...

If the elasticity of demand for good x is minus 0.5 at the
price P= $10 and quantity Q = 8000,
what is It the value of the parameter b if the demand function
is of the form Q = A + bP?
What is the value of the parameter A?
At what price and quantity is total consumer expenditure for
good x at its maximum?
At price = $10, quantity = 8000 and Income(M) = $1000, the
income elasticity...

The demand equation for widgets is P=20-2QD, where P is the
price of cookies in dollars and QD is the quantity demanded.
Calculate the price elasticity of demand for cookies between
QD1=2 and QD2=3.
Scalpers sell their tickets outside of theatres, sporting
events and concerts. Demand for scalper tickets is usually quite
high for sold-out events, as consumers have no other alternative if
they want to purchase tickets.
Using demand and
supply curves, show the change in equilibrium price and...

Ghose and Han (2014) found that the elasticity of demand for
Google Play apps is negative 3.7. This elasticity applies to a
small college town where approximately 1,000 apps per month are
sold. If price rises by 7 %, what would be the effect on quantity
demanded? The quantity demanded will ▼ increase or decrease and by
_____ percent. (Enter your response rounded to one decimal
place.)

If a price-demand equation is solved for p, then price is
expressed as p=g(x) and x becomes the independent variable. In this
case, it can be shown that the elasticity of demand is given by
E(x)= -g(x)/xg'(x) . Use the given price-demand equation to find
the values of x for which demand is elastic and for which demand is
inelastic. p=g(x)=9000-0.1x^2

Question 5
A. Explain five uses of the concept of elasticity of demand.
B. The demand curve for widgets is
QD = 10,000 - 25P.
a. How many widgets could be sold for $100?
b. At what price would widget sales fall to zero?
c. What is the total revenue (TR) equation for widgets in terms
of output, Q? What is the marginal revenue equation in terms of
Q?
d. What is the point-price elasticity of demand when P =...

. If the equation for a demand curve is
P=45-3Q. What is the elasticity in moving from a quantity of 5 to a
quantity of 6?
4. The equation for a demand curve is P=4/Q.
What is the elasticity of demand as price falls from 5 to 4?
5. The equation for a supply curve is 2P=Q.
What is the elasticity of supply as price rises from 3 to 4?
6. CenturyLink Field has 80,000 seats. What is
the shape...

Given the price – demand equation
P + 0.01x = 50
Express the demand x as a function of the price p
Find the elasticity of demand E(p)
What Is the elasticity of demand where p = $10? If this price
is decreased by 5%, what is the approximate change in demand? Will
the revenue increase or decrease?
What is the elasticity of demand when p = $45? If this price is
decreased by 5%, what is the approximate change...

Two firms control an industry and engage in Cournot competition.
The price elasticity of demand is -2.50. If one of the firms has a
constant marginal cost of $705.00 per unit and controls 75.00
percent of the industry, what is the equilibrium price? (Round to
two decimals if necessary.)

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