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all one question
- Elasticity:
- What is elasticity?
- What is Price
Elasticity of Demand ? - What is the formula that we will use to calculate it?
- After calculating the Coefficient of Price Elasticity of Demand, what are the rules we use to characterize that price range? (i.e. What importance does the number one play?)
- What is the total revenue test?
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- Need number 4 and 5 answered Elasticity: What is elasticity? Elasticity refers to the concept that provide information about the sensitivity or responsiveness of one variable to another. What is Price Elasticity of Demand? Price elasticity of demand is the responsiveness of consumers in term of quantity demanded with respect to the price change. It explains that how much quantity demanded changes with the change in the price by 1percent. What is the formula that we will use to calculate it? The formula to calculate price elasticity of demand would be: =Percentage change in quantity demanded/percentage change in price After calculating the Coefficient of Price Elasticity of Demand, what are the rules we use to characterize that price range? (i.e., What importance does the number one play?) What is the total revenue test?The formula for price elasticity of demand almost looks an average rate of change, the change in demand for a change in price, except that we're using percent change. With average rate of change, the order of the two points doesn't matter, as long as it is consistent. But with percent change, the order of points can matter, because we divide the change by the original quantity. For example, we looked at changes from 50 to 75 cents, so we divided by 50 cents. If we want to consider a price reduction from 75 cents to 50 cents, we would divide by 75 cents. Would the price elasticity of demand be the same? That's what you'll explore now. The formula would change to: (а — 2) / (p1 — рә) 92 P2 Using the two data points here, compute elasticity for Boston using the formula relative to the second point. Round your answer to the nearest hundredth. Boston Subway Fare Annual Ridership (in millions) Year 1980 0.50 158 1981 0.75 143To calculate the price elasticity of supply using the midpoint method, you would use the following approach:Group of answer choices % change in price / % change in quantity Price times quantity % change in quantity minus the % change in price % change in quantity / % change in price
- Suppose you work for a local car parts supplier, and you’re looking at ways to increase revenue. You remember from your economics course, that people respond to price changes. You decide to test this theory. Assume, that as the price of an alternator falls from $40.00 to $38.00 the quantity of Y demanded increases from 110 to 118. Then the coefficient of price elasticity of demand is: If you want to increase revenue, you should:To calculate the price elasticity of demand using the midpoint method, you would use the following approach:Group of answer choices % change in price / % change in quantity % change in quantity / % change in price % change in quantity minus the % change in price Price times quantityThe table below provides some estimates of elasticities studied in this course. Use them to answer the questions that follow. Type of Elasticity Estimate Price elasticity of demand for cigarettes -0.25 Price elasticity of supply for cigarettes 0.90 Income elasticity of demand for cigarettes -0.2 Cross-price elasticity of demand for cigarettes and alcohol 0.30 Which of the following is correct (based on the elasticity estimates above) a. Cigarettes are a complement for alcohol b. Cigarettes are a substitute for alcohol c. Cigarettes are a giffen good d. Cigarettes are a normal good
- In calculating elasticity, we use the midpoint method for calculating the percentage change because it results in the price elasticity of supply a smaller percentage change if the price rises than if it falls the same percentage change regardless of whether the price increases or decreases, because we are focusing on the magnitude. the price elasticity of demandAfter calculating the coefficient of price elasticity of demand. What are the rules we used to characterize the price range?Danny "Dollar" dela Cruz is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $1.75 each, he sells 250. At a price of $1.25 each, he sells 300. Instructions: Use the midpoint method and round your answer to two decimal places. Do not include a negative sign (-). a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? O Inelastic O Elastic c. If demand had the same elasticity for a price decline from $1.25 to $0.75 as it does for the decline from $1.75 to $1.25, would cutting the price from $1.25 to $0.75 increase or decrease Danny's total revenue? O Increase O Decrease
- To calculate the price elasticity of supply using the midpoint method, you would use the following approach:Danny "Dollar" dela Cruz is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $2.75 each, he sells 100. At a price of $2.25 each, he sells 300. Instructions: Use the midpoint method and round your answer to two decimal places. Do not include a negative sign (-). a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? Inelastic Elastic c. If demand had the same elasticity for a price decline from $2.25 to $1.75 as it does for the decline from $2.75 to $2.25, would cutting the price from $2.25 to $1.75 increase or decrease Danny's total revenue? OO Decrease IncreaseDanny “Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $1.75 each, he sells 250. At a price of $1.25 each, he sells 300. Instructions: Use the midpoint method and round your answer to two decimal places. Do not include a negative sign (-). a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? O Inelastic O Elastic c. If demand had the same elasticity for a price decline from $1.25 to $0.75 as it does for the decline from $1.75 to $1.25, would cutting the price from $1.25 to $0.75 increase or decrease Danny's total revenue? Decrease O Increase
