1. Calculate the price elasticity for the following good. State whether the price elasticity of demand is elastic, unit elastic, or inelastic. Will revenue rise, decline, or stay the same with the given change in price? Be sure to show your work. The price of water beds rises from $500 to $600. Quantity demanded falls from 100,000 to 80,000.
2. Calculate the income elasticity of demand for the following good. State whether it is a luxury, a necessity, or an inferior good. Explain. Show your work. As income decreases from $20,000 to $18,000 per year, demand for summer cottages in Vermont decreases from 80 to 75.
3. When the price of ketchup rises by 15 percent, the demand for hot dogs falls by 10 percent. Calculate the cross-price elasticity of demand. Are the goods complements or substitutes?
4. Use the accounts listed below to answer the following questions about the profit of a retail business.
Total Revenue
$80,000
Hired Labor
$30,000
Inventory purchased for resale
$20,000
Interest that the owner could have earned on an alternative investment
$2,000
Income that the owner could have earned by renting the firm
1. Calculate the price elasticity for the following good. State whether the price elasticity of demand is elastic, unit elastic, or inelastic. Will revenue rise, decline, or stay the same with the given change in price? Be sure to show your work. The price of water beds rises from $500 to $600. Quantity demanded falls from 100,000 to 80,000.
2. Calculate the income elasticity of demand for the following good. State whether it is a luxury, a necessity, or an inferior good. Explain. Show your work. As income decreases from $20,000 to $18,000 per year, demand for summer cottages in Vermont decreases from 80 to 75.
3. When the price of ketchup rises by 15 percent, the demand for hot dogs falls by 10 percent. Calculate the cross-price elasticity of demand. Are the goods complements or substitutes?
4. Use the accounts listed below to answer the following questions about the profit of a retail business.
|
Total Revenue |
$80,000 |
|
Hired Labor |
$30,000 |
|
Inventory purchased for resale |
$20,000 |
|
Interest that the owner could have earned on an alternative investment |
$2,000 |
|
Income that the owner could have earned by renting the firm |
Related textbook solutions
Related questions
1. Calculate the price elasticity for the following good. State whether the price elasticity of demand is elastic, unit elastic, or inelastic. Will revenue rise, decline, or stay the same with the given change in price? Be sure to show your work. The price of water beds rises from $500 to $600. Quantity demanded falls from 100,000 to 80,000.
2. Calculate the income elasticity of demand for the following good. State whether it is a luxury, a necessity, or an inferior good. Explain. Show your work. As income decreases from $20,000 to $18,000 per year, demand for summer cottages in Vermont decreases from 80 to 75.
3. When the price of ketchup rises by 15 percent, the demand for hot dogs falls by 10 percent. Calculate the cross-price elasticity of demand. Are the goods complements or substitutes?
4. Use the accounts listed below to answer the following questions about the profit of a retail business.
| Total Revenue | $80,000 |
| Hired Labor | $30,000 |
| Inventory purchased for resale | $20,000 |
| Interest that the owner could have earned on an alternative investment | $2,000 |
| Income that the owner could have earned by renting the firm |
1. Calculate the price elasticity for the following good. State whether the price elasticity of demand is elastic, unit elastic, or inelastic. Will revenue rise, decline, or stay the same with the given change in price? Be sure to show your work. The price of water beds rises from $500 to $600. Quantity demanded falls from 100,000 to 80,000.
2. Calculate the income elasticity of demand for the following good. State whether it is a luxury, a necessity, or an inferior good. Explain. Show your work. As income decreases from $20,000 to $18,000 per year, demand for summer cottages in Vermont decreases from 80 to 75.
3. When the price of ketchup rises by 15 percent, the demand for hot dogs falls by 10 percent. Calculate the cross-price elasticity of demand. Are the goods complements or substitutes?
4. Use the accounts listed below to answer the following questions about the profit of a retail business.
| Total Revenue | $80,000 |
| Hired Labor | $30,000 |
| Inventory purchased for resale | $20,000 |
| Interest that the owner could have earned on an alternative investment | $2,000 |
| Income that the owner could have earned by renting the firm |
