Microeconomics (7th Edition)
Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 13, Problem 13.1.5PA
To determine

Elasticity of demand under monopolistic competition.

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The Nguyen’s Noodle House in a country town decides to due to the Covid 19 situation to decrease the prices for its takeaway meals by 5%. What will happen to their total revenue and the quantity sold if their product is: a) An elastic product? b) A unitary elastic product?  c) An inelastic product? d) Which type of elasticity type do you think will apply to the meals of Nguyen’s Noodle House? Briefly explain what determinants of price elasticity will affect the product demand?
Your father owns a tourist site. He currently charges $5 per person who visits the site. Both Ghanaians and foreigners visit the site. The first demand curve is foreigners and the second is for Ghanaians. After your Econs 101 course you have realized that there may be a way to increase total revenue for your father. Using the demand curves below, answer the following questions. What is your father’s current total revenue for the 2 groups?  The elasticity of demand is more elastic in which group or market? Which market has the more inelastic demand? 1 mark What is the elasticity of demand between the prices of $5 and $2 in the foreign market? Is this elastic or inelastic? What is the elasticity of demand between $5 and $3 in the Ghanaian market? Is this elastic or inelastic?  Given the graphs and what you studied about economics, you recommend to your father to increase the price of foreigners to $8 each and lower the price of a Ghanaians to $3. How much could your father increase total…
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