ELASTICITY -What type of elasticity occurs and what is the financial result if: • The elasticity is 0.5 • Sales Price Change is 5.0% • Original Sales Price is $10.00 • Original Sales Qty 100,000. Inelastic -- Loss of $55,000 Inelastic -- Profit of $55,000 Elastic -- Profit of $55,000 Elastic -- Loss of $55,000
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ELASTICITY -What type of elasticity occurs and what is the financial result if: • The elasticity is 0.5 • Sales Price Change is 5.0% • Original Sales Price is $10.00 • Original Sales Qty 100,000.
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- 1. The American Mining Company is interested in obtaining quick estimates of the supply and demand curves for coal. The firm's research department informs you that the elasticity of supply is approxi- mately 1.7, the elasticity of demand is approximately -0.85, and the current price and quantity are $41 and $1,206, respectively. Price is measured in dollars per ton, quantity is captured as number of tons per week. (a) Is demand elastic, inelastic or unit elastic? Explain (b) Write down the linear supply and demand curves at the current price and quantity. (c) Using Excel, provide a graph of the demand and supply curves. Is the market in equilibrium? (d) Calculate the Total Revenue, Average Revenue, and Marginal Revenue of the American Mining Company at the equilibrium price and quantity.1. Use the Elasticity formula to calculate values of Elasticity for all the situations below. PRICE QUANTITY STEP 1 STEP 2 % CHANGE IN P STEP 3 PRICE ELACTICITY OF % CHANGE IN Od DEMAND Initial new Initial new 25 100 40 40 70 120 90 200 220 80 64 50 75 150 135 In each case, identify whether you would describe it as elastic / unit elastic / inelastic and why? 1. 2. 3. 4. 030In this problem, p is in dollars and q is the number of units. Suppose that the demand for a product is given by pq + p + 100g = 50,000. (a) Find the elasticity when p = $67. (Round your answer to two decimal places.) (b) Tell what type of elasticity this is. O Demand is elastic. Demand is inelastic. Demand is unitary elastic. (c) How would a price increase affect revenue? Revenue is unaffected by price. An increase in price will result in a decrease in total revenue. O An increase in price will result in an increase in total revenue.
- 2.The shoe company in Marikina have decided to increase to 18% per pair of shoes to due to its high operating and production costs. The unit cost is 599.00. The original and new demand of pairs of shoes reached 500 to 450 units respectively Calculate the price elasticity of demand, determine the type of elasticity and piot the graph of price elasticity.6) Suppose you are in charge of sales at Novartis (the largest pharmaceutical compa-ny) and your company sells a drug that causes bald men to grow hair. You calculate that price elasticity of demand for this drug at the current market price is -1.4. What type of price elasticity of demand does Novartis drug have? a. Elastic b. Inelastic c. Perfectly elastic d. Perfectly inelastic e. Unit elasticThe price elasticity of demand for a product is estimated to be -2.3. At the initial price of $20, the quantity demanded was 10 units. If the firm increases theprice to $22.50, quantity demanded is expected tobyO A. decrease: 28.75%6O B. increase; 12.596O C. decrease: 18.75%O D. increase: 17.2596
- 3.3. KindOfBlue jeans. Two years ago, KindOfBlue jeans were priced at $72 and 121,000 units were sold. Last year, the price was lowered to $68 and sales increased to 132,000. (a) Estimate the value of the demand elasticity. (b) Based on your estimate of the demand elasticity, how many units would you expect to be sold if price were lowered by an additional $1? (c) In order to increase profits, should price be lowered below $68? If your answer begins — as it should! — with “it depends,” indicate as clearly as possible what additional information you would need and how you would base your answer on such additional information.A Main OSA (2) X USN What Are the Four Factors x Brunell Commentary. Our E. X 620Main%200SA%20(2).pdf 6 / 10 100% + +1 Question 15 D If the price elasticity of demand is 0.15, and the price is doubled, this will lead to a a. 30 percent increase. b. 15 percent decrease. c. 0.30 percent increase. d. 0.15 percent decrease. New Tab x + in the quantity demanded. (4 ma anto is NOT true regarding the production function and the production possibilities cur1. Alex finds that the demand for their lemonade is given by x = 2/p4 where p is price per cup and x is cups sold. (a) Find the elasticity of demand. (b) What is the elasticity of demand when p = 1? (c) Give an interpretation of the elasticity when p = 1. In particular, if you increase the price by 1%, what happens to the demand?
- -x 230. If the demand Curve is the form of P= 10e ? where P is the price and x is the demand, what is the Price elasticity of Demand? (a) Kx (b) 는 (c) 5x (d) None1. You want to earn extra money to take your family to Disney Land so you debate whether you should increase your price or not. If your business sells 800 units per month at $20/unit. And studies reveal that your product loses 5% of it customers with every $1 increase in price. If you increase your price to $23. *You must show all of your calculations and identify the type of elasticity for the product for full marks What is the coefficient for the elasticity of demand? _________ [2] Identify the type of elasticity. _________________ [1] What would you recommend to the owner in order to help achieve their goal? [2] ____________________________________________________________________Price $20 18- 16 14 124 10- 8 100 200 300 400 + 500 600 Quantity Starting at P = $18, if we increase the price by 1%, the total revenue will increase and demand is inelastic at P = $18. Not change, and demand is unit-elastic at P = $18. increase and demand is elastic at P = $18. decrease and demand is inelastic at P = $18. decrease and demand is elastic at P = $18.