a. Why is the concept of elasticity important to consumers? What does the average person need to know about elasticity to maximize their utility? b. Why or how does elasticity matter to firms? c. Why does it matter in tax or other government policy
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a. Why is the concept of elasticity important to consumers? What does the average person need to know about
elasticity to maximize their utility?
b. Why or how does elasticity matter to firms?
c. Why does it matter in tax or other government policy?
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- How does the elasticity of a product impact Corporate Revenue? Why is it important for companies to understand this concept?Explain why the Elasticity value gets smaller as you move down the demand curve. a. As we move down the demand curve, equal changes in quantity represent smaller and smaller percentage changes, whereas equal changes in price represent smaller and snmaller percentage changes, and the absolute value of the elasticity measure declines. b. As we move down the demand curve, equal changes in quantity represent larger and larger percentage changes, whereas equal changes in price represent larger and larger percentage changes, and the absolute value of the elasticity measure declines. c. As we move down the demand curve, equal changes in quantity represent smaller and smaller percentage changes, whereas equal changes in price represent larger and larger percentage changes, and the absolute value of the elasticity measure declines. d. As we move up the demand curve, equal changes in quantity represent smaller and smaller percentage changes, whereas equal changes…Based on your understanding of elasticity, will the elasticity of demand for HPlaptops increase, decrease, or remain the same when each of the followingevents occurs? Explain your answer.i. Other computer manufacturers, such as Apple, decide to make and selllaptops. ii. Following increased advertisements, Americans believe that laptops aremore efficient than desktop computers. iii. In the long run, new laptop models are produced. b. Because patties and coco bread are often eaten together, they arecomplementary goods.i. Note that both the equilibrium price of coco bread and the equilibriumquantity of patties have risen. What could be responsible for thispattern—a fall in the price of beef or a fall in the price of flour? Illustrateand explain your answer. ii. Suppose instead that the equilibrium price of coco bread has risen butthe equilibrium quantity of patties has fallen. What could be responsiblefor this pattern—a rise in the price of beef or a rise in the price of flour?Illustrate…
- If the consumers' income increase from $200 to $300, the quantity demanded for product X will increase from 80 to 100 whereas, the quantity demanded for product Y fall from 90 to 63.a.What is income elasticity of demand for product X?b. What kind of product X to these consumers? c. What is income elasticity of demand for product Y ?d.What kind of product Y to these consumers?Economics In a dairy farm, the amount of food a cow eats is related the amount of milk the cow produces. Discuss in detail how the concept of elasticity can be applied in this case? What will elasticity help us find? What will the formulae of elasticity be in this case?Who does elasticity matter to the most? The government, the firm/business, or the individual/consumer.
- Answer each of the questions on your paper and/or in a computer file. To receive credit, youmust show all work. The price elasticity of demand for business air travel is -0.75 and for nonbusiness air travel is-1.50. a. Give an interpretation of the price elasticity of demand for business air travel. b. In what category does the price elasticity of demand for nonbusiness air travel fall? c. Show graphically how airlines could use third-degree price discrimination in thiscase.If the consumers' income increases from $200 to $300, the quantity demanded product X will increase from 80 to 100 whereas, the quantity demanded product Y fall from 90 to 63.a.What is the income elasticity of demand for product X?b. What kind of product X to these consumers? c. What is income elasticity of demand for product Y?d.What kind of product Y to these consumers?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.
- a. Why do suppliers want to create more inelastic demand relationships in the products that they sell? b. When the price of cellphone charges rises from $480 to $600 a month, the quantity demanded decreases from 204 million to 196 million subscribers. Calculate the price elasticity of demand for cellphone charges. Is the demand for elastic or inelastic? Would the demand for Flow charges be more elastic or less elastic than the demand for overall cellphone charges? Why?20. If you are selling sports car how can the information on the income elasticity help you sell your product. Explain.APPLYING ELASTICITY TO THE REAL WORLD Instructions: Each of the following stories contains an assumption about the elasticity of demand. For each story: A. State whether the assumption made about the elasticity of demand is correct or wrong. B. Justify your answer 1. Mr. Kim, a candidate for the state legislature, is proposing a large increase in the tax on cigarettes and liquor. He says, "I'm not proposing these taxes to raise revenue, but to discourage reckless drinking and the filthy habit of smoking. If the prices of cigarettes and booze go up, most people will quit using them. After all, no one has to drink or smoke." 2. KSJ, a candidate for Congress, proposes freezing the price of gasoline. "There is no substitute for gasoline," he says. "People have to get from one place to another. Economists who say higher prices will discourage people from buying as much gas as before don't live in the real world." 3. Councilman Acqua Man opposed a price increase for water during a recent…
