lasticity of demand has an effective role in the decisions of business firms. Moreover, Government rules and regulations also get affected by the change in prices of these businesses. The elasticity demand concept effectively influences devaluation and depreciation of acurrency on the export earnings of the country. It is of utmost importance that the business firms take elasticity of demand into consideration. With the increase in the elasticity of demand, the consumption behavior of the consumers also

lasticity of demand has an effective role in the decisions of business firms. Moreover, Government rules and regulations also get affected by the change in prices of these businesses. The elasticity demand concept effectively influences devaluation and depreciation of acurrency on the export earnings of the country. It is of utmost importance that the business firms take elasticity of demand into consideration. With the increase in the elasticity of demand, the consumption behavior of the consumers also

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.11P

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Hanna Corporation markets a compact microwave oven. In 2010 they sold 23,000 units at $375 each. Per capita disposable income in 2010 was $6,750. Hanna economists have determined that the arc price elasticity for this microwave oven is −1.2. Which the following statement is wrong? 1. A price decrease in 2011 will help company revenue growth 2. If all other things remain equal, sales volume for 2011 are 27,312 if price is reduced to 325. 3. Assume that arc income elasticity for microwave ovens is 2.5 and price and income effects are independent and additive. Given that the price is reduced to $325, and that per capita disposable income increases to $7,000, sales volume for 2011 will be 29,032. 4. A price increase in 2011 will help company revenue growth.
The per capita annual income of the residents of Hyderabad was Rs. 14,000 a year ago and presently it is Rs. 16,000. The income elasticity of demand for cereals is 1.15. If the consumption of cereals was 300 gm a year ago then compute the present consumption of the cereals.
The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 97e° -3p²/2, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a) Determine the price elasticity of demand E when the retail price is set at ¥ 400. E = X Interpret your answer. The demand is going down ✔✔✔ by X% per 1% increase in price at that price level. Thus, large price decrease ✓ (b) At what price will revenue be a maximum? (Round your answer to the nearest integer.) X yen (c) Approximately how many paint-by-number sets will be sold per month at the price in part (b)? (Round your answer to the nearest integer.) paint-by-number sets per month is advised.
The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 105eP - 3p/2, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a) Determine the price elasticity of demand E when the retail price is set at ¥300. E = 24 Interpret your answer. The demand is going down v by 24 % per 1% increase in price at that price level. Thus, a large price decrease v is advised. (b) At what price will revenue be a maximum? (Round your answer to the nearest integer.) yen (c) Approximately how many paint-by-number sets willI be sold per month at the price in part (b)? (Round your answer to the nearest integer.) paint-by-number sets per month
The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 95ep − 3p2⁄2, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a)Determine the price elasticity of demand E when the retail price is set at ¥300. E = Interpret your answer. The demand is going by % per 1% increase in price at that price level. Thus, a large price ___ is advised. (b)At what price will revenue be a maximum? (Round your answer to the nearest integer.) yen (c)Approximately how many paint-by-number sets will be sold per month at the price in part (b)? (Round your answer to the nearest integer.) paint-by-number sets per month
The short-run demand and supply elasticities for crude oil are -0.076 and 0.088, respectively. The current price per barrel is $30 and the short-run equilibrium quantity is 23.84 million barrels per year. Derive the linear demand and supply What will be the effects on the market price and quantity if the U.S. government decides to purchase (and store away) an additional 2 million barrels of oil? Assume that the additional consumption of oil by the government results in a parallel shift of the supply curve to the left by 2 million barrels per What could be the economic rationale for buying and storing oil?
C) What is the usefulness of price elasticity of demand in business management and economic policy decision-making process.
Given the demand and supply function for a product as Q = 1500 - 3P (Demand) Q = 1100 + 2P (Supply) (i) Find the equilibrium Price and Quantity of the product. (ii) If a GST of $50 is imposed on the product, find its effect on the equilibrium Price and Quantity. (iii) Who is more elastic, the consumer or the seller? With the help of demand and supply curve draw a suitable diagram to show the effect of GST on the equilibrium Price and Quantity
You are an economist. Your friend started a new business selling masks. She asked for your help in making some important decisions. From the data obtained from her, you computed the Price Elasticity of Demand (PED) of Masks, and found absolute PED in February was 1.26, and since then the absolute PED of Masks declined by 30% in June. (a) Based on the PED of June, you would advise your friend for an increase/decrease/unchanged in the price - Insert one word answer (increase/decrease/unchanged) (b) The market price of the mask in July was Tk15 per unit. The total revenue earned in July was Tk300. You received the data for August and observed that the price now in August is Tk26 per unit and the quantity of masks sold in August is 9 units. Calculate the absolute value of Price Elasticity of Demand (PED) for masks from July to August. Do not convert into percentage. Give your answer in 2 decimal places. Eg. If you get PED = -0.253 then submit 0.25
The cross price elasticity of demand for fuel with respect to the price of transport (e.g., automobile travelincluding insurance, etc.) has been estimated to be -0.48. If the price of transport falls by 10 percent in aperiod, how will that affect the demand for fuel in that period, all other things unchanged?
The supply and demand for a good can be presented with the following linear functions: Qd=500-2P Qs=200+4P The Pw=30(c.u.) Next year, there is an expectation of the local quantity demanded growth by 100 units. This will provoke the increase in the import. To prevent such a situation and to keep the import at the same level, the government decided to introduce the tariff. Define the size of the tariff (c.u. per unit of import).
You can drag and drop files here to add them. Consider the public policy aimed at smoking: (a) Suppose studies indicate that the price elasticity of demand for cigarettes is about 2. If the government is able to increase the price of a pack of cigarette from $2 to $3 (through may be, higher taxes), by what percentage will the consumption (demand) of cigarettes decrease? Please show all calculations. (b) Studies also find that the price elasticity of demand for cigarettes for higher income earners is more inelastic compared to that of those earning less income. Why might this be true? Please explain your answer I of U X2 x2 画 tv MacBook Pro