EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 4, Problem 3SP
To determine
Determine whether the shoppers have elastic
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Explain how price elasticity affects potential demand for a product.
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If a 10% increase in price leads to a 40% decrease in quantity demanded, what is the value of price elasticity of demand? Show your work.
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EBK PRINCIPLES OF MICROECONOMICS (SECON
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- a. Why do suppliers want to create more inelastic demand relationships in the products that they sell? b. When the price of cellphone charges rises from $480 to $600 a month, the quantity demanded decreases from 204 million to 196 million subscribers. Calculate the price elasticity of demand for cellphone charges. Is the demand for elastic or inelastic? Would the demand for Flow charges be more elastic or less elastic than the demand for overall cellphone charges? Why? c. When the price of rice falls from $100 to $80, the quantity demanded of rice increases from 10 to 25, the quantity demanded of potatoes decreases from 20 to 15, and the quantity demanded of chicken increases from 18 to 35. i. Calculate the cross elasticity of demand for potatoes with respect to rice.ii. Calculate the cross elasticity of demand for chicken with respect to rice.iii. Of what use are these two cross elasticities of demand to the owner of abusiness that sells potatoes and chicken?arrow_forwarda. Why do suppliers want to create more inelastic demand relationships in the products that they sell? b. When the price of cellphone charges rises from $480 to $600 a month, the quantity demanded decreases from 204 million to 196 million subscribers. Calculate the price elasticity of demand for cellphone charges. Is the demand for elastic or inelastic? Would the demand for Flow charges be more elastic or less elastic than the demand for overall cellphone charges? Why?arrow_forwardElasticity of demand tells us: How much price responds to a shift in demand How people react to a change in demand. How much quantity demanded changes when price changes. How much price changes in response to a change in demand.arrow_forward
- The subway fare in your town has just been increased from 50 cents to $1.00 per ride. As a result, the transit authority notes a decline in ridership of 60 percent. What is the price elasticity of demand for subway rides?arrow_forwardJust based on general information you possess, do you think the demand for computers is likely to be elastic or inelastic? The demand for six-packs of Seven-Up?arrow_forwardWhen the price of cellphone charges rises from $480 to $600 a month, the quantity demanded decreases from 204 million to 196 million subscribers. Calculate the price elasticity of demand for cellphone charges. Is the demand for elastic or inelastic? Would the demand for Flow charges be more elastic or less elastic than the demand for overall cellphone charges? Why?arrow_forward
- Price elasticity of demand measures the responsiveness of the quantity demanded to a change in price when all other influences on buyers’ plans remain the same. Write an essay explaining the different types of price elasticity of demand.arrow_forwardWhat are the various factors affecting price elasticity of demandarrow_forwardChoose a product which you are familiar with. Using the internet for research (please cite your source), what is the price elasticity of demand for this product or group of products? What does that mean with respect to a 10% increase in the price of this good? What happens to quantity demanded? Which of the 4 determinants of price elasticity of demand do you believe drives this outcome about the good's price elasticity? If there is more than one determining factor, please explain your reasoning. [for many goods, all of the 4 determinants come into play - I just want you to choose the one or two that you believe are most relevant).arrow_forward
- Demand means the desire for a particular good backed up by sufficient purchasing power. Explain.arrow_forwardWhat types of things might impact price elasticity?arrow_forwardIn bazaars around the world, haggling over price is a way of life. Do you think a seller’s reservation price (the lowest price that will be accepted) is influenced by demand elasticities?arrow_forward
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