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‚ inelastic‚ or unit elastic? ____________________ e. Why might computers have this type of elasticity of demand? _________________________________________________________ 2. Flu vaccinations cost $19 per shot. If the industry decided to sell them for
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Supply and Demand - The graduate applies the laws of supply and demand to develop a desirable relationship between supply and demand in a given situation. Objective 309.1.2-08: Differentiate between elastic and inelastic demand. Objective 309.1.2-09: Discuss the application of elastic and inelastic demand in a given marketing situation. Introduction: Supply and demand concepts have application in everyday life. They also directly impact the business person in daily decisions. Task: A. Define
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because the opportunity cost of buying the product will become too high. A good or service is considered to be highly elastic if a slight change in price leads to a sharp change in the quantity demanded or supplied. Usually these kinds of products are readily available in the market and a person may not necessarily need them in his or her daily life. On the other hand‚ an inelastic good or service is one in which changes in price witness only modest changes in the quantity demanded or supplied‚ if
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Chapter-1 MANAGERIAL ECONOMICS Multiple Choice Questions 1 Which of the following is a characteristic of a perfectly competitive market? a. Firms are price setters. b. There are few sellers in the market. c. Firms can exit and enter the market freely. d. All of these 2 If a perfectly competitive firm currently produces where price is greater than marginal cost it a. will increase its profits by producing more. b. will increase its profits by producing less. c. is making positive economic profits
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%∆P Types of Price Elasticity of Demand (Inelastic and Elastic Demand): 1) Fairly elastic demand Fairly elastic demand is the percentage change in the quantity demanded exceeds the percentage change in price. The price elasticity of demand‚ n is greater than 1 and the good is said to have a fairly elastic demand. The examples of goods or services that have fairly elastic demand are automobiles‚ international travels‚ transportation services and others.
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close substitutes Higher elastic demand - easier for consumers to switch from one good to the similar others Necessities versus luxuries Inelastic demand – Necessity Elastic demand – luxury Depends on the perception of consumer whether good is a necessity or luxury Definition of the market Depending on how we draw the boundaries of the market Narrowly defined market High elastic demand – easier to find close substitutes Broadly defined market Fairly inelastic demand – harder to find substitute
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Everyone’s Gasoline Problem: As we all know that the price of gasoline is definitely driven by the concept of supply and demand. Never the less prices fall‚ quantity demand will rise‚ when price rises‚ quantity demanded will fall. Usually this is a true statement in most cases. But gasoline is a necessity to most Americans. The demand for fuel does not decrease when the price increase. Consumers often influence the price of gasoline. Gas prices in the late spring and summer months are the highest
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measure it. AACSB: Analytic Skills Special Feature: None 3) If demand is inelastic‚ the absolute value of the price elasticity of demand is A) one. B) less than one. C) greater than one. D) greater than the absolute value of the slope of the demand curve. Answer: B Comment: Recurring Diff: 1 Page Ref: 169/169 Topic: Elastic and Inelastic Demand Objective: LO1: Define price elasticity of demand and understand how to measure it.
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the following statements is correct? a. b. c. d. Denise receives no satisfaction from Good A; *Denise receives no satisfaction from Good B; Denise will only consume A and B in fixed proportions; None of the above. 4. When a good has a unitary price elasticity‚ consumer expenditures for the good ___________. a. change in the same direction as a price change; b. change in the opposite direction and by the same percentage as any price change; c. change in the opposite direction to a price
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price LG TV increases from LE 500 to LE 600‚ calculate the cross-price elasticity. PED = (Q2 - Q1 / Q1) / (P2 - P1 / P1) = (20‚000 / 100‚000) / (-200 / 1‚000) = (0.2 / -0.2) = - 1 Unit Elastic CPED = (Q2 - Q1 / Q1) / (Py2 - Py1 / Py1) = (20‚000 / 100‚000) / (-100 / 500) = (0.2 / 0.2) = -1 Unit Elastic Complement good 2. A manufacturer of a computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following
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