Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 6.3.10PA
Sub part (a)
To determine
What must be true about the price elasticity of demand for the publisher's books.
Sub part (b)
To determine
What would happen when the demand for book is elastic.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hans is a butcher in Washington. The following contains data on prices and weekly sales at his shop Good Beef Chicken
Price 9.00/lbs $4.00/lbs Quantity 400 lbs 300 lbs ShS He estimates that the own price elasticity for beef is 2 and for
chicken is .75. He also estimates that the cross price elasticity for chicken is .60. His current revenue from the sale of
these two goods is making a total of $4800/week. In the spirit of the return to good times and outdoor grilling, he has
decided to lower the price of beef for the summer, from $9.00 to $8.55. Overall, Hans can expect to take in dollars
in revenue, given the information in this problem? (Revenue = Price x sales). Record your answer without a dollar sign
and without a comma. Helpful Hint: In this problem, we are not changing the price of chicken.
Alex's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania.
Initially, Alex produced eight fire engines, but he has decided to increase production to
nine fire engines. The following graph shows the demand curve Alex faces. As you can
see, to sell the additional engine, Alex must lower his price from $75,000 to $50,000 pe
fire engine. Note that while Alex gains revenue from the additional engine he sells, he a
loses revenue from the initial eight engines because he sells them all at the lower price.
Use the purple rectangle (diamond symbols) to shade the area representing the revenu
lost from the initial eight engines by selling at $50,000 rather than $75,000. Then use t
green rectangle (triangle symbols) to shade the area representing the revenue gained
from selling an additional engine at $50,000.
PRICE (Thousands of dollars per fire engine)
250
200
175
150
125
100
25
Alex
1
O True
3
S
7
QUANTITY (Fire engines)
False
Demand
Revenue Lost
Revenue…
Macmillan Learning
John and Michael are the only consumers in a town that is planning on putting on a fireworks display. The graph illustrates
John's and Michael's demand curves for a fireworks display. Based on the information given in the graph, manipulate the
movable demand curve to reflect the overall demand for the fireworks display.
Cost ($)
4
3
2
5
12
11
10
9
287
John's demand
6
Michael's demand
1
0
0.0
1.0
2.0
Quantity
Demand
3.0
What kind of good is a fireworks display?
O quasi-public good
public good
private good
common resource
Chapter 6 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 6 - Write the formula for the price elasticity of...Ch. 6 - If a 10 percent increase in the price of Cheerios...Ch. 6 - Prob. 6.1.3RQCh. 6 - Prob. 6.1.4RQCh. 6 - Prob. 6.1.5PACh. 6 - Prob. 6.1.6PACh. 6 - Prob. 6.1.7PACh. 6 - Prob. 6.1.8PACh. 6 - Prob. 6.1.9PACh. 6 - Prob. 6.1.10PA
Ch. 6 - What are the key determinants of the price...Ch. 6 - Prob. 6.2.2RQCh. 6 - Prob. 6.2.3PACh. 6 - According to a news story about the bus system in...Ch. 6 - Prob. 6.2.5PACh. 6 - Prob. 6.2.6PACh. 6 - The entrance fee into Yellowstone National Park in...Ch. 6 - Prob. 6.3.1RQCh. 6 - Prob. 6.3.2RQCh. 6 - Prob. 6.3.3PACh. 6 - Prob. 6.3.4PACh. 6 - Prob. 6.3.5PACh. 6 - Prob. 6.3.6PACh. 6 - Prob. 6.3.7PACh. 6 - Prob. 6.3.8PACh. 6 - Prob. 6.3.9PACh. 6 - Prob. 6.3.10PACh. 6 - Prob. 6.3.11PACh. 6 - Prob. 6.3.12PACh. 6 - Define the cross-price elasticity of demand. What...Ch. 6 - Prob. 6.4.2RQCh. 6 - Prob. 6.4.3PACh. 6 - Prob. 6.4.4PACh. 6 - Prob. 6.4.5PACh. 6 - Prob. 6.4.6PACh. 6 - Prob. 6.4.7PACh. 6 - Prob. 6.4.8PACh. 6 - Prob. 6.4.9PACh. 6 - Prob. 6.5.1RQCh. 6 - Prob. 6.5.2PACh. 6 - Prob. 6.5.3PACh. 6 - Prob. 6.5.4PACh. 6 - Prob. 6.5.5PACh. 6 - Prob. 6.5.6PACh. 6 - Prob. 6.5.7PACh. 6 - Write the formula for the price elasticity of...Ch. 6 - Prob. 6.6.2RQCh. 6 - Prob. 6.6.3PACh. 6 - Prob. 6.6.4PACh. 6 - Prob. 6.6.5PACh. 6 - Prob. 6.6.6PACh. 6 - Prob. 6.6.7PACh. 6 - Prob. 6.6.8PACh. 6 - Prob. 6.6.9PACh. 6 - Prob. 6.2CTE
Knowledge Booster
Similar questions
- Suppose a local supermarket runs a discount campaign on the sales of shampoos using discount coupons – any customer who shows a discount coupon will be offered an X% discount on the original retail price on Black Friday. Briefly explain the economics behind this discount campaign.arrow_forwardIn fall 2006, Pace University in New York raised its annual tuition from $25,000 to $29,200. Freshman enrollment declined from 1,500 in fall 2005 to 1,140 in fall 2006. Assuming that the demand curve for places in the freshmen class at Pace did not shift between 2005 and 2006, use this information to calculate the price elasticity of demand. Use the midpoint formula in your calculation. Source: Karen W. Arenson, "At Universities, Plum Post at Top Is Now Shaky," New York Times, January 9, 2007. The price elasticity of demand for Pace University for the fall of 2006 is (Hint: include the negative sign and enter your response rounded to two decimal places) The demand for places in Pace's freshman class is price Calculate the total revenue generated from Pace's freshman class in 2005 S Calculate the total revenue generated from Pace's freshman class in 2006 The total amount of tuition Pace received from its freshman class in 2006 compared with 2005arrow_forwardYears ago, an apple producer argued that the United States should enact a tariff, or a tax, on imports of bananas. His reasoning was that “the enormous imports of cheap bananas into the United States tend to curtail the domes-tic consumption of fresh fruits produced in the United States.”. Was the apple producer assuming that apples and bananas are substitutes or complements? Briefly explain. If a tariff on bananas acts as an increase in the cost of supplying bananas in the United States, use two demand and supply graphs to show the effects of the apple producer’s proposal. One graph should show the effect on the banana market in the United States, and the other graph should show the effect on the apple market in the United States. Be sure to label the change in equilibrium price and quantity in each market and any shifts in the demand and supply curves.arrow_forward
- If you were selling a product with a price elastic demand, briefly describe in a typedresponse what factors you would emphasize and not emphasize in your advertising?arrow_forwardResearch on the admission fees to national parks has found that the price elasticity of demand for annual visits to Arches National Park is 0.2. The National Park Service is now considering a 10-percent increase in the admission fee. a) What will happen to the number of annual visits to Arches National Park? Solve for a numerical answer. b) Will the revenues that the park collects increase or decrease? Briefly explain.arrow_forwardTwo drivers—Kenji and Lucia—each drive up to a gas station. Before looking at the price, each places an order. Kenji says, “I'd like 10 gallons of gas.” Lucia says, “I'd like $10 worth of gas.” Why does Lucia's demand has an unit elasticity instead of an elasticity equal to infinity?arrow_forward
- Q. 2 a)Jim advertises to sell donuts for $5 a dozen. She sells 60 dozen, and decides that she can charge more. She raises the price to $6 a dozen and sells 40 dozen. Calculate price elasticity of demand. What can you infer about the elasticity of donut demand? b) Assume the pair of CDS: CD of Bangla Song vs CD of Bangla folk song. Which one has more elastic demand? Briefly explain.arrow_forwardWhat are 2 products with different price elasticities of demand, and how do you analyze how firms can use information about price elasticity of demand to their advantage?arrow_forwardIf you are the seller will you increase the price of your product instantly if it is price elastic? Explain you answer briefly.arrow_forward
- Please read attached article and then use it to answer the following questions. Do companies prefer to sell products that are more elastic or more inelastic? Briefly explain. What does the article describe as the best way to calculate price elasticity, and what other information is relevant to inform marketing efforts? Suppose a marketing company runs a market test and finds that the price elasticity equals -0.6. Would a company be more inclined to increase or to decrease price given this elasticity? Explain what would happen to quantity purchased (by how much it would change) and total revenue (would it increase, decrease, or stay the same) if the company were to decrease price by 10%.arrow_forwardc. Will Erin's total revenue rise if she increases the price from $90 to $110? d. Calculate the price elasticity of demand between $110 and $130.arrow_forwardSUonsanh uaunsaau uMo Synopsis Your friend calls you and asks to borrow $20,000 so that he can open a Sushi restaurant in his hometown. In justifying this request, he argues that there must be significant demand for Sushi and other Asian food in his hometown because there are lots of such restaurants already there and three or four new ones are opening each month. He also argues that demand for Asian food will continue to increase and he points to the large number of firms that now sell frozen Asian dishes in grocery stores. Will you lend him money? What are the risks involved in choosing to lend him money? Instructions Please write 200-500 words of text. Using the external analysis tools (PESTLE analysis or Porter's five forces analysis), support your decision. Write your answer in a clear and organized paragraph. Your answer should include a clear and precise thesis that directly addresses the question.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author: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
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
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
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education