Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Chapter 3, Problem 4E
To determine
The
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A rise in the price of a crate of Pepsi from USD 20 to USD 30 results in a fall in the quantity of crate of Pepsi demanded from 220 million to 180 million a day and at today’s price of a Coca-Cola, USD 15, the quantity of Coca-Cola demanded increases from 80 million to 100 million a day.
Kindly Answer ONLY (d)
a). Calculate the percentage change in the price of a crate of Pepsi and the percentage change in the quantity demanded of Pepsi. Use the average price and average quantity.b). Calculate the price elasticity of demand for Pepsi. c). Is the demand for Pepsi elastic or inelastic? Explain please
d). Calculate and explain the cross elasticity of demand for Coca-cola with respect to the price of a Pepsi.
A restaurant owner learns that when he raises the price of his fries from $1 to $1.50
the quantity demanded falls from 100 to 90 baskets. This owner should
raise the price of fries
O lower the price of fries
keep the price of fries same
Do you think the price of sugar is inelastic or elastic?
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- A Wall Street Journal headline states: "A Nation of Snackers Snubs Old Favorite: The Beloved Cookie." As U.S. consumers adopted more carbohydrate-conscious diets, the number of cookie boxes sold declined 5.4 percent that year, the third consecutive year of decline. 9.00 5.75 5.00 4.25 1.00 100 Cookie Market 300 450 550 700 Quantity (in millions) reset D 900 EQ Price 10.0- 9.5- 9.0- 8.5- 8.0 7.5 7.0- 6.5- 6.0- 5.5- 5.0- 4.5- 3.5- 3.0 2.5 2.0 1.5 1.0 0.5 52 Cookie Firm Some firms exit the industry and the supply curve shifts to the left, causing price to be higher than its previous level. Some firms enter the industry and the supply curve shifts to the right, causing price to decline further. Some firms exit the industry and the supply curve shifts to the left, causing price to be lower than its previous level. ● Some firms exit the industry and the supply curve shifts to the left, causing price to return to its previous level. 100 200 300 400 500 600 700 800 900 1000 Quantity MC reset…arrow_forwardBased on income elasticity of demand, what type of good is cigarette?arrow_forwardFor an inferior good, the quantity demandedarrow_forward
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