Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 16APA
(a)
To determine
Which
(b)
To determine
Price elasticity of demand.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
10.
Consider the following table based on the article "The effect of prices on nutrition: Comparing the
impact of product- and nutrient-specific taxes" by Matthew Harding and Michael Lovenheim in the Journal of
Health Economics (53: 53-71).
Good
Strawberries
Watermelons
Carrots
a.
Price Elasticity of
Demand
- 1.128
-0.830
- 1.379
C.
Which of the above are normal goods? How do you know?
b. If average income decreases by 5 percent, calculate the change in demand for strawberries:
The demand for (circle the correct answer):
Strawberries is
Watermelons is
Income
Elasticities
1.625
1.134
0.943
Carrots is
d. Strawberries and (circle the correct answer:
Watermelons are
Cross Price Elasticity with
Strawberries
1
Carrots are
-0.058
0.025
Elastic / Inelastic
Elastic / Inelastic
Elastic / Inelastic
Substitutes/complements
Substitutes/ complements
Please see the information below. I need assistance with this problem.
The table shows information on the conditions of demand for ordinary gummy bears and their sugar-free version.
Price ($ per kg)
Sugar-free Gummy Bears Demanded (thousands of kg)
Regular Gummy Bears Demanded (thousands of kg)
$2.20
183.00
487.00
$2.60
177.00
381.00
$3
159
275.00
$3.40
139.00
157.00
As the price of gummy bears rises from $2.60 to $3, what are the price elasticities of demand of sugar-free gummy bears and of ordinary gummy bears? Use the midpoint method and specify answers to one decimal place.
Elasticity of demand of sugar-free gummy bears:___________
Elasticity of demand of regular gummy bears:______________
Consider public policy aimed at smoking.
a. Studies indicate that the price elasticity of
demand for cigarettes is about 0.4. If a pack
of cigarettes currently costs $2 and the
government wants to reduce smoking by
20 percent, by how much should it increase
the price?
b. If the government permanently increases
the price of cigarettes, will the policy have a
larger effect on smoking one year from now
or five years from now?
c. Studies also find that teenagers have a
higher price elasticity than do adults. Why
might this be true?
Chapter 4 Solutions
Macroeconomics
Ch. 4.1 - Prob. 1RQCh. 4.1 - Prob. 2RQCh. 4.1 - What makes the demand for some goods elastic and...Ch. 4.1 - Prob. 4RQCh. 4.1 - Prob. 5RQCh. 4.2 - Prob. 1RQCh. 4.2 - Prob. 2RQCh. 4.2 - What does the cross elasticity of demand measure?Ch. 4.2 - Prob. 4RQCh. 4.3 - Prob. 1RQ
Ch. 4.3 - Prob. 2RQCh. 4.3 - Prob. 3RQCh. 4.3 - Provide examples of goods or services whose...Ch. 4.3 - Prob. 5RQCh. 4 - Rain spoils the strawberry crop, the price rises...Ch. 4 - Prob. 2SPACh. 4 - Prob. 3SPACh. 4 - Prob. 4SPACh. 4 - Prob. 5SPACh. 4 - Prob. 6SPACh. 4 - Prob. 7SPACh. 4 - Prob. 8SPACh. 4 - The table sets out the supply schedule of jeans....Ch. 4 - Prob. 10APACh. 4 - The figure shows the demand for DVD rentals. a....Ch. 4 - Prob. 12APACh. 4 - Prob. 13APACh. 4 - Prob. 14APACh. 4 - Prob. 15APACh. 4 - Prob. 16APACh. 4 - Prob. 17APACh. 4 - Prob. 18APACh. 4 - When Alexs income was 3,000, he bought 4 bagels...Ch. 4 - Prob. 20APACh. 4 - Prob. 21APACh. 4 - Prob. 22APACh. 4 - The table sets out the supply schedule of...Ch. 4 - Prob. 24APACh. 4 - Prob. 25APACh. 4 - Prob. 26APACh. 4 - Prob. 27APA
Knowledge Booster
Similar questions
- If everyone thinks that the price of gas will go up next week, what is likely to happen to the demand for gasoline today?arrow_forwardHow do you suppose the demographics of an aging population of Baby Boomers' in the United States will affect the demand for milk? Justify your answer.arrow_forward(Determinants of Price Elasticity) Would the price elasticity of demand for electricity be more elastic over a shorter or a longer period of time?arrow_forward
- Refer to the graph below to answer the questions. Use the mid-point formula. Please show your working calculation. $4 10 A 8 1 2 3 4 5 Number of hamburgers If the price of a hamburger increases from RM8 to RM10, the price elasticity of demand equals а. b. If the price of a hamburger increases from RM6 to RM8, the price elasticity of demand equals If the price of a hamburger decreases from RM6 to RM4, the price elasticity of demand equals C. 4. 2. Pricearrow_forwardThe U.S. Department of Agriculture guarantees dairy producers that they will receive at least $1.00 per pound for butter they supply to the market. Below is the current monthly demand and supply schedules for wholesale butter (in millions of pounds per month). Market for Wholesale Butter Price (dollars per pound) $0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 Quantity of Quantity of Butter Butter Demanded Supplied (nillions of (millions of pounds) 109 106 103 100 97 94 91 88 85 82 B 79 pounds) 65 73 81 89 97 105 22 million pounds 79 million pounds 113 121 129 137 145 Instructions: Round your answer for price to two decimal places. Enter your answers for quantity as a whole number. a. What are the equilibrium price and quantity in the wholesale butter market? P = $ Q= million pounds b. What is the monthly surplus created in the wholesale butter market due to the price support (price floor) program? zero Help Save &arrow_forwardDo you agreee that when the price of petrol rises, the demand for cars decreases.arrow_forward
- An experiment is conducted that provides the data in the accompanying table. Number of vehicles using the tollway per day 10,000 12,000 Toll rate $8 $6 a. What is the absolute value of price elasticity when the toll rate decreases from $8 to $6 (use the midpoint method)? Round to the nearest hundredth. Absolute value of price elasticity of demand: b. Price elasticity of demand for the toll road is considered to be c. What is the change in total revenue when the toll is decreased from $8 to $6? d. In order to maximize revenue, the toll rate should bearrow_forwardConsider public policy aimed at smoking. a.Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $2 and the government wants to reduce smoking by 20 percent, how much should it increase the price? If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking one year from now or five years from now? Studies also find that teenagers have a higher price elasticity than do adults. Why might this be true?arrow_forwardThe diagram to the right illustrates a hypothetical demand curve representing the relationship between price (in dollars per unit) and quantity (in 1,000s of units per unit of time). 1007 90- The area of the triangle shown on the diagram is $. (Enter your response as an 80- integer.) 70- 64 60- 50- 40- 38 30- 20- 10- D :26 :52 04 10 20 30 40 50 60 70 80 90 10 Quantity (1,000s of units per unit of time) Price (dollars per unit)arrow_forward
- Given what you have learned about 1) demand (and its determinants) and quantity demanded and 2) supply (and its determinants) and quantity supplied. Peanut crops have been destroyed by fungus. Consumers are substituting almond butter for peanut butter because they perceive it to be a healthier option. The prices of both peanut butter and almond butter are rising. Why? Since peanuts were destroyed by fungus this will lead to a decrease in the supply of peanuts used to make peanut butter. A decrease in supply will lead to an increase in the price of peanut butter. Almond butter is being used as a substitute for peanut butter because it is healthier. This will increase demand which will increase the price. Am I in the right ballpark here as to why both prices increased? A graph will really help me grasp how to solve this. Thank youarrow_forwardThe table below shows the percentage change in quantity demanded of sending regular mail, of sending parcels, and of home broadband service in Australia from a one-percent increase in each specified price (holding all other prices constant): Change in price of: Sending regular mail Effect on quantity of: Sending regular Sending parcels Home broadband mail -1.5 Sending parcels 0 Home broadband +0.05 0 -1 -0.7 +0.01 -0.11 -0.5 a) For which services is quantity demanded price elastic? Or price inelastic? b) Which services are substitutes and which are complements? c) How would an increase in the price of sending regular mail affect total revenue to Australia Post from that service? How would an increase in the price of home broadband affect total revenue to suppliers of broadband?arrow_forwardHurricane Sandy to Raise Prices on Used Cars The immediate impact of Hurricane Sandy was devastating, and the storm's ripple effects will continue to be felt in the weeks and months ahead as communities work to recover. One side effect becoming apparent is Sandy's influence on the used car market. According to the Detroit Free Press, the destruction of some 250,000 vehicles has led to a shortage that could affect late-model used vehicle prices nationwide. The National Auto Dealers Association estimates that prices could increase 0.5% to 1.5%. That may not seem like much (550-S175 per vehicle), but Edmunds.com suggests that in the short term, prices could jump $700 to $1.000. Source: George Kennedy, Autoblog, November 10, 2012. © 2012 AOL Inc. All rights reserved. Market for Used Cars Post-hurricane Supply 23000 Pre-hurricane Supply 22000 21000 20000 Market Demand 19000 18000 6000 7000 8000 9000 10000 11000 Quantity (cars per day) Based on the News Wire, a. What is the initial…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax