7. Phillip sold 1200 tickets for the holiday concert at Earl Haig for $20 per ticket. His committee is planning to increase the prices this year. Their research has shown that for each $2 increase in the price of the tickets, 60 fewer tickets will be sold. a) What should Phillip's committee sell each ticket for, to maximize their revenue?

Price (dollars) 8 7 D. 5 10 15 20 25 30 35 Quantity (units per year) In the figure above, when the price falls from $8 to $7, total revenue A) decreases from $210 to $120 so demand is inelastic. B) increases from $120 to $210 so demand is inelastic. C) decreases from $210 to $120 so demand is elastic. D) increases from $120 to $210 so demand is elastic. 6

a. Define price elasticity of demand, and cross-price elasticity of demand.                   b. If the cross-price elasticity of demand between two goods is negative (EXY<0), what can be said about the                              relationship between these two goods?                   c. If the Boston Red Sox know that the demand for their tickets is elastic (ED>1), should they increase or                             decrease the price of their tickets in order to increase total revenue?  Explain.

2) Ernesto is looking to purchase a new vehicle as his income has increased from $2,000 per month to $3,000 per month, so his purchase increases from 0 to 1 vehicle. He see's a new Mercedes Benz that decreased its price from $45,000 to $42,000. What is Ernesto's income elasticity of demand for a Mercedes Benz vehicle?

Question 4 (A) Explain the factors that affect the price elasticity of demand for a product.

a. How much would the firm’s revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this range?   Revenue change: $    Demand is              in this range.   b. How much would the firm’s revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this range?   Revenue change: $    Demand is              in this range.   c. What price maximizes the firm’s total revenues? What is the elasticity of demand at this point on the demand curve?   Price that maximizes total revenues: $    Demand is              at this point.

8. Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin pops, flopsicles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin pops decreases by 10%, the quantity of flopsicles sold decreases by 9% and the quantity of kipples sold increases by 9%. Your job is to use the cross-price elasticity between penguin pops and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…

(i) InfoConsider the three demand functions in the file Elasticity. Calculate the elasticities of these three demand functions when the price of the product increases from P = $200 per unit to P = $400 per unit. Enter the elasticities as positive numbers.   Elasticity of the red demand function =   Elasticity of the green demand function =   Elasticity of the blue demand function =..

Suppose the own price elasticity of demand for good X is −2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is −6. Determine how much the consumption of this good will change if:Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (−) sign.a. The price of good X decreases by 5 percent. percentb. The price of good Y increases by 10 percent. percentc. Advertising decreases by 2 percent. percentd. Income increases by 3 percent.  percent

Why do we say goods become more elastic over time?   Question 9 options:   people's incomes will increase, and so the elasticity of demand decreases.   the good's price will have a chance to return to its previous level.   people can find more substitutes, and so the elasticity of demand decreases.   people can find more substitutes, and so the elasticity of demand increases.