elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below $140? At the given prices‚ quantity demanded is 750 units: Qdx = 1‚200- (3 *140) -.1 (300) = 750. -140/750=-.56; demand is inelastic at this price point and you would be decreasing total revenue with anything under b) What is the own price elasticity of demand when Px = $240? Is demand elastic or inelastic at this price? What would happen to the
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Introductory Microeconomics Assignment 2 Due date: Value: Note: Word limit: Tuesday 17 September 2013 This assignment is worth 10% of your final grade in this unit This assignment is an individual assignment 1000 words. General assignment instructions Read the task carefully and in your answer address the concepts and issues associated with each part of the task. Remember DO NOT PLAGIARISE. http://policy.monash.edu.au/policy-bank/academic/education/conduct/plagiarism-policy
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When demand is elastic‚ the percentage of a price change of a product will result in a larger percentage of quantity demanded (McConnell‚ p 77). It basically means reducing the price of a good service will result in a greater quantity demanded and an increase in revenue for the seller. When demand is inelastic‚ a change in price will result in a reduction of quantity demanded‚ which will then lead to a revenue decrease (McConnell‚ p 77). To demonstrate elastic and inelastic demand results‚ Company
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good‚ what will happen to the demand and supply of the good? This is when the theory of elasticity comes to play. Government should impose tax on cigarettes as it is price inelastic. According to Investopedia (2010) states that smoker with fewer substitutes will continue purchasing cigarettes as cigarettes are inelastic when price of cigarettes increases. An increase in price would bring a small reduction in quantity demanded. The diagram above shows the effects of tax towards the demand and
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industries than the nations they trade with. A) True B) False 4. If demand is perfectly inelastic‚ the deadweight loss caused by a tax
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Topic 5 – Demand‚ Supply and government policy (Week five Oct 6th – Oct 13th) Outline: 1. Price Ceiling: -- General Analysis; -- Example: Rent Control; 2. Price Floor: -- General Analysis; -- Example: minimum wage law; 3. The Incidence of Sales Tax -- Key Results; -- Numerical Examples: a)Tax levied on sellers; b)Tax levied on buyers; -- Elasticities of demand and supply; Price Ceiling A legal maximum on the price at which a good can be sold 1) General Analysis Price 12 PE 8 Shortage 16 QE
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rightward shift of the supply curve leads to a 6 percent decrease in the price and a 5 percent increase in the quantity demanded‚ the price elasticity of demand is _____. We can conclude that the elasticity of demand is _____ A) 0.30; inelastic. B) 0.60; elastic. C) 0.83; inelastic. D) 1.20; high. Price (dollars per bushel) Quantity demanded (bushels) 8 2‚000 7 4‚000 6 6‚000 5 8‚000 4 10‚000 3 12‚000 3) The table above gives the demand schedule for snow peas. The price elasticity of demand increased from
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that this good is very elastic‚ so elastic that it is not as heavily affected by price as other good due to the degree of necessity. 3. When heavy rain ruined the banana crop in Central America‚ the price of bananas rose from $1 a pound to $2 a pound. Banana growers sold fewer bananas‚ but their total revenue remained unchanged. By how much did the quantity of bananas demanded change? Is the demand for bananas from Central America elastic‚ unit elastic‚ or inelastic? The quantity demanded
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Unit 1 Assignment Chapter 4 1. What is a competitive market? Briefly describe a type of market that is not perfectly competitive A competitive market is a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker (Mankiw‚ p.66). Local energy provider is not a perfect market but a monopoly because there in only one provider. 2. What are the demand schedule and the demand curve‚ and how are they related? Why does the demand curve
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increase in DD (C)4. If the price falls from $8 to $7‚ the quantity of demanded rises from 4 to 6‚ then total revenue (A)increase‚ and demand is inelastic.(B)decrease‚ and demand is elastic (C)increase‚ and demand is elastic. (D)decrease‚ and demand is inelastic (A)5. Milk has an inelastic demand‚ and beef has an elastic demand. Soppose that a mysterious increase in bovine infertility decrease both the population of dairy cows and the population of beef
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