ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- If the price elasticity of demand for gasoline equals 0.3, then qn increase in the price of a gallon of gasoline from $3.70 to $3.90 A) decreases total revenue. B) increases total revenue. C) leads to no change in total revenue. D) makes the demand for gasoline elastic. E) Both answers B and D are correct.arrow_forward10arrow_forward(a) Consider a firm that is particularly interested in estimates of elasticities. It discovers that its cross-price elasticity of demand between good A, which it sells and good B, which another firm sells is +5.3. Its price elasticity of demand for good A is estimated as -2.5 and its income elasticity of demand is +2.5, while the price elasticity of supply is +0.3. Comment on the implication of these figures for the firm. Discuss the information that this provides to the firm and how it can use this to develop its product, pricing and overall strategy.arrow_forward
- The demand function for product is p = -4q+400 and the average cost for producing q units 500 is c = 37q + 40 + where p= price, and q= quantity demand. 2 9 1. 2. 3. 4. Compute the point elasticity of demand and find the intervals where the demand is inelastic, elastic, and the price for which the demand is unit elastic. Find the quantity that maximizes the total revenue and the corresponding price. Interpret your result. Find the quantity that minimizes the average cost function and the corresponding price. Interpret your results. What are the quantity and the price that maximize the profit? What is the maximum profit? Interpret your result.arrow_forward1) Assume that the percentage change of the price of product A is 5% (%Px and the percentage change of quantity demanded is - 10% (%Δqd), Find the following, a) The price elasticity of demand b) Is the demand for this product elastic or inelastic? c) If the price of the product A increases, What happens to total revenue? (increases or decreases) d) if the price increases by 1% by how much quantity demanded will decrease (more than 1%, less than 1%, or by exactly by 1%) 2) Assume that the percentage increase in the price of product X ( %ΔPx) is 4% and the percentage change in quantity demanded in product Y ( %Δqd) is -5%, find the cross price elasticity (Eyx), are product X and Y substitutes or complements? 3) Assume that the percentage increase in income (%ΔI) is 4% and the percentage decrease in the quantity demanded (%Δq) is -6%, find income elasticity (EI), Is this product a normal or inferior product? 4) Is the elasticity for Corn flakes cereal is greater of less…arrow_forwardA snowmobile dealer lowers its prices by 16 percent and the quantity demanded increases by 2 percent. Thus the demand for snowmobiles from this dealer is and the dealer's total revenue will A) elastic; increase B) inelastic; increase C) inelastic; decrease D) elastic; decreasearrow_forward
- Assume that the price elasticity of demand is -2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to: decrease. increase. remain constant. either increase or remain constant, depending upon the size of the price increase. A price elasticity of zero corresponds to a demand curve that is: horizontal. downward sloping with a slope always equal to 1. vertical. either vertical or horizontal. As we move down along a linear demand curve, the price elasticity of demand becomes more: elastic. Inelastic. linear. variable.arrow_forwardIf the supply of a good decreases and it causes total revenue to increase, this shows that the good has an A) elastic supply. B) inelastic demand. C) elastic demand. D) inelastic supply.arrow_forwardA) Compute the elasticity of demand for x = D(p) = 40000 − 100p at p = 300. B) Find the price p that should be charged to maximize revenue.arrow_forward
- For the demand function q = D(p) = 442-p, find the following a) The elasticity b) The elasticity at p = 110, stating whether the demand is elastic, inelastic or has unit elasticity c) The value(s) of p for which total revenue is a maximum (assume that p is in dollars) ... a) Find the equation for elasticity. E(p) = b) Find the elasticity at the given price, stating whether the demand is elastic, inelastic or has unit elasticity E(110) (Simplify your answer. Type an integer or a fraction) Is the demand elastic, inelastic, or does it have unit elasticity? = inelastic elastic unit elasticity c) Find the value(s) of p for which total revenue is a maximum (assume that p is in dollars) (Round to the nearest cent. Use a comma to separate answers as needed.)arrow_forwardQuestion No 4: Calculate the Elasticity of Demand by using Midpoint Formula Price (P) Quantity Demanded (Q) Elasticity Coefficient of Demand (Ed) Total Revenue TR(P×Q) Total Revenue Test Elastic, Inelastic or Unit elastic 1 6 2 5 3 4 4 3 5 2 6 1arrow_forward300 For the demand function q = D(x) = , find the following. a) The elasticity b) The elasticity at x = 3, stating whether the demand is elastic, inelastic, or has unit elasticity c) The value(s) of x for which total revenue is a maximum (assume that x is in dollars) a) Find the equation for elasticity. E(x) =Oarrow_forward
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