Suppose the price elasticity of demand for cigarettes is -0.7 and that the government can essentially set the price of cigarettes by altering the tax rate. If the government wishes to reduce the quantity of cigarettes demanded by 20 percent, how much must it raise the price of cigarettes? The government, to achieve its goal, must raise the price of cigarettes by percent. (Enter your response rounded to two decimal places)
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- Suppose that the government enacts a tax on retail sales of road salt, which homeowners and businesses put on walkways and driveways. Assume that the supply of salt is perfectly elastic, due to the ease with which suppliers can stockpile the product.Before the tax, 900 fifty-pound bags of road salt are sold at an equilibrium price of $7 per bag. After the tax, 775 bags are sold at $8 per bag. How much revenue does the tax generate for the government? What is the amount of the tax? $Suppose that the quantity of steel demanded in France is given by Qk = 100 +2Ps + 0.5Y + 0.2PA, where Qs is the quantity of steel demanded per year, Ps isthe market price of steel, Y is real GDP in France, and PA is the market priceof aluminum. In 2011, Ps = 10, Y = 40, and PA = 100. How much steel will bedemanded in 2011? What is the price elasticity of demand, given marketconditions in 2011?In France, where cheese is an important and traditional part of people’s meals, people eat about sixtimes as much cheese per person as in the UnitedStates. In which country do you think the demandfor cheese will be more income-elastic? Why?
- Suppose an 18 percent drop in the price of strawberries leads to a 24 percent increase in the quantity demanded of strawberries and a 12 percent decrease in the quantity demanded of plums. a. What is the price elasticity of demand for strawberries? Instructions: Enter your response rounded to two decimal places. b. At the current price level, the demand for strawberries is (Click to select) because the price elasticity of demand for strawberries is (Click to select) c. What is the cross-price elasticity of demand between strawberries and plums? Instructions: Enter your response rounded to two decimal places. d. Strawberries and plums are (Click to select) because the cross-price elasticity of demand is (Click to select)Describe the economic concept of Elasticity evaluate the interpretation of different types, kinds and measurement methods with examples.Country Z produces and consumes only two products: milk and bread. The price elasticity of demand ofbread is Ed = −0.1 = 0.1 and the price elasticity of demand of wheat is Ed = −2 = 2The government of country Z needs a significant amount of fund to tackle the current coronavirussituation. To obtain the fund, they have decided to impose a $ 5 tax on either the sellers of rice or thesellers of wheat. Currently, both the equilibrium prices of wheat and rice are $20 per unit respectively.The equilibrium quantities of wheat and rice are 10,000 units (per day) respectively.As the economic advisor of country Z, what would you advise the government of country Z. Whichproduct should they tax to obtain the fund to tackle the coronavirus situation? Discuss in detail using theModel of Demand and Supply (your answer should include two well labeled graphs).
- In the state of Santa Lucia cigarettes were selling for $8.03 per pack before a $0.25 per pack increase. Last year about 3.8 million pack of cigarettes were sold per month at $8.03 per pack. The price elasticity of demand for cigarette packs is -1.35. How much revenue, in millions of dollars, will be produced each month from this new tax?What unanswered questions do you have on why economists use the term price elastic to describe quantity demanded? Can you extend our discussion by explaining how economists use the term price inelastic to describe quantity demanded? What real-world examples do you have of price elastic and price inelastic goods or services?2. Calculating the price elasticity of demand: A step-by-stepguide Suppose that during the past year, the price of a virtual reality headset fell from $4,500 to $4,300. During the same time period, consumer sales increased from 353,000 to 499,000 headsets. Calculate the elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant part of the table with the appropriate answers. (Note: For decreases in price or quantity, enter values in the Change column with a minus sign.) Original Percentage Change Quantity Price $ New Average $ Change $ Step 1: Fill in the appropriate values for original quantity, new quantity, original price, and new price. Step 2: Calculate the average quantity by adding the original quantity and the new quantity, and then dividing by two. Do the same for the average price. Step 3: Calculate the change in quantity by subtracting the original quantity from the new quantity. Do the same for the…
- Suppose that the price of cotton has increased from AED 100 per kilo to AED 150 per kilo. Suppose that the quantity demanded of this cotton was 450,000 tons in the market of cotton and after changing the prices of cotton this quantity is changed to 200,000 tons. 1- Calculate the PED (price elasticity of demand) ( 2- Is the demand in this market elastic or not? And why? 3- To increase the revenue of the seller, is it better to increase the price or decrease it? and why?The initial price of a cup of coffee is $1, and at that price, 400 cups are demanded. If the price falls to $0.90, the quantity demanded will increase to 500. Calculate the (arc) price elasticity of demand for coffee. Based on your answer, is the demand for coffee elastic or inelastic? Based on your answer to a., if the price of coffee is increased by 10%, what will happen tothe revenues from coffee? Carefully explain how you know.The average annual income rises from $25,000 to $38,000, and the quantity of bread consumed in a year by the average person falls from 32 loaves to 28 loaves. What is the income elasticity of bread consumption? Round your answer to two decimal places.