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4 Nov 2018

A) (6 points) The price elasticity of Nora's demand for bagels is EB = -2.0, the income elasticity of demand for bagels is Es=0.5, the cross price elasticity of demand between donuts and bagels is EDB = 0.75, and the cross price elasticity of demand between cream cheese and bagels is ECB = -0.6. Show your work as you answer the questions below. a) (2 points) If the price of donuts falls by 20%, you anticipate that the quantity of bagels demanded by Nora will change by __ _%

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Lelia Lubowitz
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7 Nov 2018
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Related questions

I. When the question requires a supply or demand graph, you are required to draw the graph(s) to answer the question. Do not forget to label your graphs completely and correctly.

II. If the question has multiple parts, like a, b, and c; you need to draw a graph for each part that requires one and separate your answers as a, b, and c.

III. When you draw graphs, you are also required to label them completely in order to earn full credit for your answers.

Separate your answers with their question number.

Question 1: Patrick owns a bagel business in Seattle and he wants to increase his total revenue. He knows that when bagels are $1.00, he sells 250 an hour, and when lowers the price to $0.75 he sells 275 an hour.

a. Using the midpoint formula and showing your work, calculate the price elasticity of demand for Patrick's bagels.

b. Using the price elasticity of demand for Patrick's bagels, explain whether he should raise or lower the price to generate more revenue.

c. Andrew's bakery moves in across the street from Patrick's shop. Explain what is likely to happen to the price elasticity of demand for Patrick's bagels.

Ā 

Question 2: If we know that the price elasticity of demand is:

a. 5, graph the demand curve.

b. 0.5, graph the demand curve.

c. infinite, graph the demand curve

Ā 

Question 3: A firm knows that the price elasticity of demand for its service is 0 (zero).

a. Graph this demand curve.

b. What should the firm do to the price of its good to raise total revenue?

Ā 

Question 4: In a recession, there are many unemployed workers. Employers find that when the price of labor is $9.00, the quantity supplied is 200 workers. When they lower the wage to $8.50, 175 workers are willing to work.

a. Using the midpoint formula and showing your work, calculate the price elasticity for workers.

b. Over time, technology becomes more efficient as a substitute for workers. What happens to a firm's demand for workers? Explain.

microeconomics help

In a job interview, SuperlativeBuy asks you whether they should run a 15% sale or not. They give you the following data about past sales and the behavior of two groups: loyalty-rewards members and those who aren't. Using the information below, justify whether they should run the 15% sale for loyalty-rewards members only, non-rewards members only, or both. (2 points for own-price elasticity of demand calculations and answer for loyalty-rewards members; 2 points for the same for non-rewards members; 2 points for loyalty-, non-, or both)

The quantity demanded by loyalty-rewards members increased from 1,482,000 to 1,567,000.

The quantity demanded by non-rewards members increased from 975,843,000 to 1,002,934,000.

The cross-price elasticity of Taco Siren and Taco Paul's is +1.89. The cross-price elasticity of pizza and pizza bagels is +.77. Why is the cross-elasticity of Taco Siren and Taco Paul's greater than the cross-price elasticity of pizza and bagels? (2 points for defining cross-price elasticity; 2 points for unpacking what each cross-price of elasticity means; 2 points for answering question)

Using the following information, calculate (using the midpoint formula) the own-price elasticity of demand as a Carhenge Souvenir T-shirt rises from $15 to $18 and the average tourist income is $30,000. (2 points)

Then calculate the elasticity when income is $40,000 and the price rises from $15 to $18. (2 points)

Now, use the midpoint formula to calculate the income elasticity of demand when the price of a T-shirt is $12 and average tourist income increases from $30,000 to $40,000. (2 points)

With the information given, is it possible to estimate of what will happen to the demand for Carhenge T-shirts when the price of a T-shirt is $12 and average tourist income increases from $40,000 to $50,000? If so, what is your estimate? (2 points)

Price of T-Shirt Quantity of T-shirts when avg tourist income is $30,000 Quantity of T-shirts when avg tourist income is $40,000
10 2,845 5,833
12 2,087 4,199
15 1,195 2,802
18 345 1,975

1. Suppose the price elasticity of demand for bread is 1.00. If the price of bread falls by 20%, the quantity demanded will increase by:

2. Suppose that a 20% decrease in the price of good Y causes a 20% increase in demand for good X. The coefficient of cross-price elasticity of demand is:

3. When the price of a quart of milk increased from $1.55 to $2.00 the quantity demanded decreased from 21,000 per day to 19,000 per day. In this range, the price elasticity of demand is:

4. If the elasticity of supply for crude oil is 0.5, how much will the price have to increase to increase production by 20%?

5. Demand for X increases from 100 to 125 when the price of Y increases from $5 to $6. The cross-price elasticity of demand is:

6. Demand for X increases from 100 to 125 when the price of Y increases from $5 to $6. The cross-price elasticity of demand is:

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