Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 6, Problem 4DQ
Research has found that an increase in the
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Suppose the demand curve for a product is: Q = 90 – 6P + 4Ps, where P is the price of the product and
Ps is the price of a substitute good. If Ps = $6 and P = $10, the cross-price elasticity of demand is
Select one:
O A.
0.61
О в.
0.44
С.
0.84
OD.
0.32
If an increase in price from $1 to $2 causes a decrease in quantity demanded from 120 to 100, calculate the price elasticity of demand by using
the midpoint method.
O 1.2
O 1.3
O 0.27
O 0.5
A 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-
Cola by 50 percent. The cross elasticity of demand between a Pepsi and Coca-
Cola is
Pepsi and Coca-Cola are:
Select one:
O a. 5; substitutes
O b. 0.2; complements
O c. 50; substitutes
O d. 5; complements
In order to prove that peanut butter and Jelly are complements, one should
measure the
and get a
***Destroy all sheets/clear white board during the exam before logging out
(make sure the proctor sees you)**
Select one:
O a. cross-price elasticity; negative number
O b. price elasticity of demand; number greater than 1 (in absolute value)
O c.
cross-price elasticity; positive number
O d. price elasticity of demand; number less than 1 (in absolute value)
Chapter 6 Solutions
Microeconomics
Ch. 6 - Explain why the choice between 1, 2, 3, 4, 5, 6,...Ch. 6 - Prob. 2DQCh. 6 - The income elasticities of demand for movies,...Ch. 6 - Research has found that an increase in the price...Ch. 6 - Prob. 5DQCh. 6 - Suppose that the total revenue received by a...Ch. 6 - Suppose that the total revenue received by a...Ch. 6 - Calculate total-revenue data from the demand...Ch. 6 - Prob. 4RQCh. 6 - 5. In 2006, Willem de Kooning’s abstract painting...
Ch. 6 - Suppose the cross elasticity of demand for...Ch. 6 - Look at the demand curve in Figure 6.2a. Use the...Ch. 6 - Prob. 2PCh. 6 - Graph the accompanying demand data, and then use...Ch. 6 - Danny Dimes Donahue is a neighborhoods 9-year-old...Ch. 6 - What is the formula for measuring the price...Ch. 6 - ADVANCED ANALYSIS Currently, at a price of 1 each,...Ch. 6 - Prob. 7P
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- Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose from $95 to $105, what would be the elasticity of supply if the quantity supplied changed from a. 38 to 42? b. 78 to 82? c. 54 to 66?arrow_forwardSuppose you learned that the price elasticity of demand for wheat is 0.7 between the current price for wheat and a price 2 higher per bushel. Do you think that farmers collectively would try to reduce the supply of wheat and drive the price up 2 higher per bushel? Explain your answer. Assuming that they would try to reduce supply, what problems might they have in actually doing so?arrow_forward(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?arrow_forward
- Suppose you are in change of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your companys product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.arrow_forwardThe Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?arrow_forwardSuppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000) Quantity Demanded (income = 12,000) 8 40 DVDs 50 DVDs 10 32 45 12 24 30 14 16 20 16 8 12 a. Use the midpoint method to calculate your price elasticity of demand as the price of DVDs increases from 8 to 10 if (i) your income is 10,000 and (ii) your income is 12,000. b. Calculate your income elasticity of demand as your income increases from 10,000 to 12,000 if (i) the price is 12 and (ii) the price is 16.arrow_forward
- Although we could describe both the cross-priceelasticity of demand between paper coffee cupsand plastic coffee lids and the cross-price elasticityof demand between sugar and artificial sweeteners as highly elastic, the first cross-price elasticityis negative and the second is positive. What is thereason for this?arrow_forwardIf the price of petröl increases by 4% and the demand for petrol falls by 1%, what is the price elasticity of demand for petrol? O-0.25 O 0.25arrow_forwardFor a certain good, when the good's price falls from $12 to $10, its quantity demanded rises from 10 to 12 units. The price elasticity of demand here is O 2.55. 0.66. O 0.39. O 0.20. 1.00arrow_forward
- If the price of ice cream increases from $8 to $10 a gallon, quantity demanded of frozen yogurt increases from 120 to 138 gallons, ceteris parībus. As a result, the price elasticity of demand is 0.6278 and ice cream and frozen yogurt are substitute goods O 0.6278 and ice cream and frozen yogurt are complement goods O 1.5928 and ice cream and frozen yogurt are substitute goods O 1.5928 and ice cream and frozen yogurt are complement goodsarrow_forwardAssume that a decrease of 10 percent in the price of cars results in an increase of 30 percent in quantity demanded, then the price elasticity of demand is 3 O 0.5 O 1 O 0.333arrow_forwardConsider the table below. Assuming the law of demand holds, the cell labeled "?" could be which of the following quantities? Price of a Quantity of movies movie Demanded $15 155 $17 ? O 155 163 157 171 O 143arrow_forward
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