Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 22, Problem 4CQ
To determine
The effects of tax in price, profit, and gross expenditure.
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Students have asked these similar questions
Daffy’s is a pet care company that recently increased the average price of its services by 5%. As a result, the number of customers dropped by 4%. How will this 5% increase of the average price of services impact total revenue at Daffy’s?
Consider the demand function for bicycles in South Florida:
Q = 24 + 3Y – 1.2P
where: Q is quantity demanded, Y is monthly income, and P is the price per unit.
If/when P = $54, and Y = $2,300,
(a) Find the quantity of bicycles that would be sold.
(b) Calculate the amount of the seller's total revenue.
(c) Compute the price-elasticity of demand (Ep) for bicycles.
(d) Interpret your result in (c).
(e) Compute the income-elasticity of demand (Ey) for bicycles.
(f) Interpret your result in (e).
In this problem, p is in dollars and q is the number of units.Suppose that the demand for a product is given by
(p + 7)
q + 6
= 1120.
(a) Find the elasticity when
p = $33.
(Round your answer to two decimal places.)(b) Tell what type of elasticity this is.
Demand is elastic.Demand is inelastic.
Demand is unitary.
(c) How would a price increase affect revenue?
An increase in price increases revenue.
An increase in price decreases revenue.
Revenue is unaffected by price.
Chapter 22 Solutions
Economics: Private and Public Choice (MindTap Course List)
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