Ghose and Han (2014) found that the elasticity of demand for Google Play apps is -3.7. This elasticity applies to a small college town where approximately 1,000 apps per month are sold. If the price rises by 22%, what would be the effect on quantity demanded?

Would the quantity demanded increase or decrease? And by what %?

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Romarie Khazandra MarijuanLv10

28 Sep 2019

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Suppose you are a manager contemplating potential consequences resulting from a five percent increase in the price of a particular healthcare product. According to your organization's research division, the point price elasticity of demand for this product is a negative one. And the proposed change is likely to decrease the quantity demanded by 10,000 units per month. Unfortunately, the researchers did not indicate what the current monthly quantity demand is; which is something you need to be prepared to present at a stakeholder's meeting this afternoon. So, what is the current quantity demanded per month figure the researchers used to calculate the point price elasticity of demand for this product?

coffeeferret216

1-Economists recently found that a lot of increase in the price of beer caused the quantity demanded of wine to increase by 4%. This means that the cross-price elasticity of demand between beer and wine is.
a. 0.4, and beer and wine are substitutes
b. 2.5, and beer and wine are complements
c. 0.4, and beer and wine are complements
d. 2.5, and beer and wine are substitutes.

2. A I0% increase in the price of a movie ticket in Westridge 8 leads to an l5Yo decrease in the number of tickets sold, indicating the demand for movie tickets in Westridge 8 is:
a. elastic.
b. inelastic.
c. unit elastic.
d. Can not tell from the information given.

3. If economists estimate that the price elasticity of the supply of physician services is 0.2 then the supply of physician services is_ anda25o/o decrease in the price of physician services will result in the quantity supplied of physician services.
g. inelastic; 5olo decrease
h. inelastic; 5olo increase
i. inelastic;25Yo decrease
j. inelastic; 25olo increase
k. inelastic; 500/o decrease
l. inelastic; 500/o increase

4. A 5% decrease in the price of country music concert tickets causes a 15o/o increase in the demand for beer then the cross-price elasticity of demand between country music concert tickets and beers
a. -3.0 and tickets and beer are complements
b. -0.3 and tickets and beer are complements
c. -3.0 and tickets and beer are substitutes
d. -0.3 and tickets and beer are substitutes

5. An economist for the jeans industry has estimated the price elasticity of demand for blue jeans at -2.9. Based on this estimate 5o/o decrease in the price of jeans would result in a
a. 145% decrease in the quantity demanded of jeans
b. 14.5% increase in the quantity demanded of jeans
c. 2.9%o decrease in the quantity demanded of jeans
d. 2.9Yo increase in the quantity demanded of jeans

periwinkleduck471

Suppose that corn currently costs $4.00 per bushel and that wheat currently costs $3.00 per bushel. Also assume that the price elasticity of corn is 0.15, while the price elasticity of wheat is 0.20. For the following questions about elasticities, simply use the percentage changes that are provided rather than attempting to calculate those percentage changes yourself using the midpoint formula.

Instructions: In parts a and b, round your answers to 2 decimal places. In part c, round your answers to 1 decimal place.

a. If the price of corn fell by 25 percent to $3.00 per bushel, by what percentage would the quantity demanded of corn increase? percentage?

What if the price of corn fell by 50 percent to $2.00 per bushel? Percentage?

b. To what value would the price of wheat have to fall to induce consumers to increase their purchases of wheat by 5 percent? $ per bushel.

c. If the government imposes a per-bushel tax on corn of $0.40 so that the price of corn rises by 10 percent to $4.40 per bushel, by what percentage would the quantity demanded of corn decrease? Percentage?

If the initial quantity demanded is 10 billion bushels per year, by how many bushels would the quantity demanded decrease in response to this tax? Million bushels.

yellowhedgehog866

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