Suppose that the price of a good changes from 10 dollars to 20 dollars while the quantity demanded changes from 200 units to 125 units. Therefore, the arc price elasticity of demand is: OA -0375 OB -0692 OC 0012 OD -1200
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- The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 95e−3p2 + p, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a) Determine the price elasticity of demand E when the retail price is set at ¥400. E = _____ Interpret your answer. The demand is going down/up by ____ % per 1% increase in price at that price level. Thus, a large price decrease/increase is advised. (b) At what price will revenue be a maximum? ____ hundred yen (c) Approximately how many paint-by-number sets will be sold per month at the price in part (b)? (Round your answer to the nearest integer.) ______ paint-by-number sets per monthIn one month, a Pizza Hut restaurant sold 5500 personal pizza at RO 4.50 per pizza. When this restaurant increased its price by 30%, its total revenue for the next month increased to RO 18,720. As a result of this price increase, however, the monthly sales of POP decreased from 3500 to 3000 cans. Using the arc elasticity method: (i) Find the own price elasticity of demand for this restaurant’s pizza. (ii) Find the cross elasticity of demand for pop with respect to the price of the pizzas. Are the two substitutes or compliments?Solve for demand price elasticity when price is at Php. 18
- Sunglasses manufacturer Oakley, Inc. produces high-end and low-end versions of their performance sunglasses. They estimate that the demands for their products are given by: High-end sunglasses: P = 130 - 2QH , and Low-end sunglasses: P = 80 - QL, where Q is measured in 1000 sunglasses, "H" denotes High-end and "L" denotes Low-end Both types of sunglasses are produced on the same production line in the same facility, so the marginal cost of producing and selling both types of sunglasses is constant at $30. Supposing that (i) the two demands are independent and (ii) Oakley can produce and market the sunglasses such that the high- and low-end markets are successfully segmented, what are the profit-maximizing prices Oakley would charge for each version? O PH = $80 and PL= $55. O By the "midpoint rule", PH = $65 and PL = $40. O PH = $130 and PL = $80. O Oakley will set price equal to marginal cost for both versions, i.e., P = $30.Hand written solutions are strictly prohibittedThe demand and supply equations for product A are given by the following equations respectively : ?=40−5? ?=10+2.5?. Compute the price elasticity of demand and price elasticity of supply at equilibrium.
- If the quantity sold of a product rose from 4 units to 10 units as a result of a price decrease from $12 to $10 then the elasticity coefficient is:AJM distributors has hired you to provide financial advice on a product being sold. They have supplied the following information: The equation: p= 40 - x 4 Using the above equation they would like you to supply information regard to pricing of one of their new products. Make an analysis of the price elasticity of demand obtained from the function given, informing all of the members of the team: -procedure of calculation -Analysis of value obtained -Explanation on how various values of elasticity can affect the profitability of the company Explain the implications (if any) by setting p at a value of $25 vs $30 Advise on how this price increase to $30, will affect the demand for the product and the profitability to the company.Q3. Refer to the diagram. Using the midpoint formula, calculate the price elasticity of demand between the prices of $15 and $12. Accordingly, state whether demand is elastic or inelastic between these two points. P$/unit 15 12 D 18 22 Q (units/week) Ep = Damand ie ... Q4. For each case below, answer the bolded questio Classification of the Case Calculations product(s) if requested to do so 1. Suppose that a 2% increase in income in the economy decreases the quantity of gadgets demanded by 1% ar every E,= Gadgets are possible price. Find the income elasticity of demand and dassify the product accordingly (state whether gadgets is a normal, necessity, luxury or an inferior product). 2. A firm finds that its price elasticity of demand is 4.0. Currently, the firm is selling 2000 units per month at $5 per unit. Price must be lowered by= If it wishes to increases its quantity sold by 10%, by how much it must lower its price? 1 Suppose legalization-and subseque nt regulation-of products Xand…
- The company is considering lowering the price of Model A to $27 in an effort to increase the number of units sold. Based on the results of price changes that have been instituted in the past, Tennis Products’ chief economist estimates the arc price elasticity of demand to be –2.5. Furthermore, she estimates the arc cross elasticity of demand between Model A and Model B to be approximately 0.5 and between Model A and Model C to be approximately 0.2. Variable costs per unit are not expected to change over the anticipated changes in volume. a. Evaluate the impact of the price cut on the (i) total revenue and (ii) contribution margin of Model A. Based on this analysis, should the firm lower the price of Model A? Explain b. Evaluate the impact of the price cut on the (i) total revenue and (ii) contribution margin for the entire line of tennis rackets. c. Based on this analysis, should the firm lower the price of Model A? ExplainA single producer company surveyed the elasticity data of its product X. The results indicated that: - X has an income elasticity of +0.8 - The cross-elasticity of X with Y is equal to -0.7 - The price elasticity of X is |0.8| Given these results, the company estimated that the forecast increase in consumer income is 5% next year, the expected increase in the price of Y is 10%. If the company intends to increase its sales by 3% in the following year, what is your recommendation for an adjustment in the price of X? (Hint: Consider the increase in income, then the effect of Y on X and then calculate the price adjustment to be made)Please no hand written solution