ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Remembering the learning activity in Unit 3, the Gondwanaland chairman of production reported that the gosum berry growers could meet a demand of 700 barrels of gosum berries per month at a price of $70 per barrel.
Then the growers were plagued with a gosum berry bug infestation that reduced output, causing production to fall to only 600 barrels. This resulted in a price increase to $84 per barrel. The following table shows the chairman’s report:
|
Month |
Monthly barrels of gosum berries demanded |
Price per barrel |
|
June |
700 |
$70 |
|
July |
600 |
$84 |
- Using the midpoint method, show your work and calculate the
price elasticity of demand for Gondwanaland gosum berries. Explain what this price elasticity of demand means?
- Complete the table below by calculating what the monthly total revenue is for June, what the monthly total revenue is for July, and the change in total monthly revenue for these two months. How have these numbers changed?
(Enter your response here.)
|
Month |
Monthly barrels of gosum berries demanded |
Price per barrel |
Monthly total revenue (Enter Totals Below) |
|
June |
700 |
$70 |
(Enter monthly total revenue here) |
|
July |
600 |
$84 |
(Enter monthly total revenue here) |
|
|
|
|
Change in monthly total revenue: (Enter change in monthly total revenue here.) |
- Using your answer to part a. above, how could you have predicted the change in monthly total revenue that you found in part b. above?
(Enter your response here.)
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