4.2 Worksheet – Calculating Elasticity of demand 1. Otten Industries sells notebook computers for $800 a computer. Mrs. Otten‚ owner‚ decides to decrease the price of these computers to $750. As a result‚ the quantity demanded for notebook computers rose from 500 to 550. a. Calculate the percentage change in price ___________________ b. Calculate the percentage change in quantity demanded ____________ c. Calculate the elasticity of demand _______________________ d. Is it elastic‚
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Colgate=s Distasteful Toothpaste Colgate is a very well known company in the United States remembered for its toothpaste. It not only specializes in personal care but in household care as well. The New York based company also included Ajax‚ Fab‚ and Hill pet foods. Even though Colgate is one of the largest toothpaste brands in United States‚ they still have to be careful about the decisions they make overseas. Colgate is well known in other countries such as Australia‚ Latin America‚ Canada
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Compute the arc price elasticity of demand over this price and consumption quantity range. Ey = ((1800 – 1500) / ((1800 + 1500) / 2)) ((1.75 – 2.25) / ((1.75 + 2.25) / 2)) Ey = 300 ($4.00) -$0.50 (300) Ey = -8% 4. The subway fare in your town has just been increased from a current level of 50 cents to $1.00 per ride. As a result‚ the transit authority notes a decline in ridership of 30 percent. a. Compute the price elasticity of demand for subway rides. fare price increase
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elasticity of demand measures the responsiveness of the quantity demanded / price to a change in the quantity demanded / the quantity supplied / price. [Delete wrong words.] (b) Give the formula for price elasticity of demand. 2. Back in the mid-1990s‚ the government in the UK announced that for every 10 per cent rise in the price of cigarettes‚ the demand was likely to fall by 6 per cent. If this information was correct‚ what was the value of the price elasticity of demand for cigarettes
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or E= P ? Why? ΔP Q P−A At point R‚ Q is not given‚ and ΔQ/ΔP cannot be computed. Thus E = P is the only method to use at point R. P−A Technical Problem 2 Chapter 7 2. The estimated market demand for good X is Qˆ = 70 – 3.5P – 0.6M + 4PZ where Qˆ is the estimated number of units of good X demanded‚ P is the price of the good‚ M is income‚ and PZ is the price of related good Z. (All parameter estimates are statistically significant at the 1
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In today’s day and age eMarketing would be one beneficial way to promote our new Crest Organic Children’s toothpaste. In June of 2010‚ there was 266‚244‚500 internet users registered in the United States. The internet has a few choices we can use to have potential customers directed to our product. The main form of internet advertising is Pay Per Click‚ PPC. PPC is a way of buying traffic to our site when a potential customer clicks on ads that is created for us. The ads are created using a PPC
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The toothpaste market in India is estimated at 7000 crores with a CAGR of approximately 12% between the 2008-2013 timeframe. The toothpaste (or in general‚ the oral care) industry is marked by: Low Bargaining Power of Suppliers owing to commoditized raw materials High Bargaining Powers of Customers owing to low switching costs and high number of options. High Rivalry amongst players owing to multi-player nature of the industry with frequent product launches. Medium Threat of New Entrants owing
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elasticity of demand is the percentage change in price divided by the percentage change in quantity demanded. F 2. Demand is said to be inelastic when a reduction in price results in a decrease in total revenue. T / F 3. When the price of coffee increases 8%‚ quantity demanded decreases 5%. The elasticity of coffee must be inelastic. (PERCENTAGE OF PRICE IS GREATER THAN THE PERCENTAGE OF QUANTITY BY 1/1/2) T 4. The more substitutes there are for the product the more price elastic the demand for the
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stimulus generalization. 2. The marketers of Crest and Colgate can decrease consumer confusion regarding toothpastes and related oral hygiene products by distinguishing the difference between the products they offer. For this reason‚ there will remain a fierce competition in the marketplace between these two brands. Crest and Colgate both offer a line of products that profess to do the same things. They both offer various types of toothpaste‚ floss‚ and mouthwash as well as toothbrushes. To decrease
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www.hemonline.com BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY Equity Research Report On Colgate Palmolive India Limited For Institutional Clients Analyst: ANKIT KHAITAN akhaitan@hemonline.com www.hemonline.com BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY Colgate Palmolive India Limited Market Cap: 6205.35 Crore Outstanding Shares: 13.59 Crore Price as of 13 April: 456.30 Book Value Per Share: 12.61 th 14 April 2009 th BUY Industry: FMCG
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