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What do you understand by demand and what would you say is its main purpose?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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16. What do you understand by supply and what would you say is its main purpose?
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I. II. 6) The accompanying table shows the price and yearly quantity sold of souvenir T-shirts in the town of Pokhara, Nepal according to the average income of the tourists visiting. Price Quantity Demanded when Quantity Demanded when Income=20,000 Income 30,000 4 5 6 7 3000 2400 1600 800 5000 4200 3000 1800 Using the midpoint method, calculate the income elasticity of demand when the price of a T-shirt is 4 Nepalese Rupees and the average tourist income increases from 20,000 to 30,000 rupees. Also calculate it when the price is 7 rupees. Also answer the following questions for each cases ● The demand for this product is income elastic / income inelastic. ● Based on this information, T-shirts would be considered as (luxuries / necessities) Using the midpoint method, calculate the price elasticity of demand when the price of a T-shirt rises from 5 to 6 rupees and the average tourist income is 20,000. Also calculate it when the average tourist income is 30,000.
20. If there is a rise in price of Galaxy chocolate, people will demand KitKat chocolate and consequently the demand for KitKat chocolate will increase. - Identify the type of demand and explain the reason and relationship.
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5. The demand equation for a good is given by the equation: Q, = 520 – 20P, + 0.6Y + 2.9P, a. Find the price, income and cross price elasticity of demand when P, = 10, Y = = 21 700 and b. Discuss the effect on demand if there were a 20% increase in price c. Discuss the effect on demand if there were a 50% decrease in income
b. "In terms of condiments and spices locals normally consume chive and celery together. For root crops, dasheen and eddoes are often combined." iii. Apply the cross elasticity of demand formula to explain why a decrease in the price for eddoes from January to February caused an increase in demand for dasheen over the same period.
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1. Online the timing and tailoring of prices to specific models of products is the key to successful pricing in online markets. And “Thanks to the ready availability of data in online markets, a pricing manager can easily approximate the elasticity of demands for the different products it sells online.” Assuming a 10 percent decrease in price increases sales by 28 percent, calculate the price elasticity of demand? If the wholesale price of the online product is $50 and sells at a price comparison site that charges $.50 per click and boasts a conversion rate of 5 percent (an average of 20 clicks are needed to generate a sale). What price should you charge for the product? What is the optimal markup on cost? 2. The authors assert that price sensitivity is affected by (1) product life cycles, and (2) numbers of competitors. In fact, “when the number of competing sellers doubles, a firm’s elasticity of demand is expected to double (and you should be able to verify this through…
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