ECON 1900 Study Guide - Demand Curve

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amaranthmuskrat712

21 Feb 2013

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In diagram 1, the absolute value of the price elasticity of demand over the price range. - is: one, less than one, greater than one, 0. 5. Answer: c) all of section a on diagram 1 is relatively elastic: the absolute value of price elasticity of demand is continuously decreasing as price falls in diagram(s), 1, 2, and 3, 2, 4, 1. Answer: d: as price decreases, total revenue increases, reaches a maximum and then decreases for the demand curve in diagram, 1, 2, 3, 4. Answer: a) for the elastic portion, %)p > %) q so a decrease in price causes tr to increase. At the midpoint, %) p = %) q. The bottom half is inelastic iso tr falls as price fall since %) p < %) q: the good which has the fewest substitutes is shown in diagram, 1. b)2.

Related Questions

1. Assume a monopoly has the following demand schedule:

Price (P) Quantity (Q)

$20 200

15 300

10 500

5 700

(a) Calculate total revenue (TR) at each P and Q combination.

(b) Calculate marginal revenue per unit for each decrease in price.

(c) For the change in price from $20 to $15, calculate the interval elasticity of demand. Is demand elastic or inelastic?

(d) For the change in price from $20 to $15, obtain the Lerner index.

aquamarinetiger116

Use the following demand schedule for a monopolist to calculate total revenue and marginal revenue. For each price, indicate whether the demand is elastic, unit elastistic or inelastic. Using the data from the demand schedule,graph the demand curve, the marginal revenue curve and the total revenue curve. Identify the elastic, unit elastic and inelastic segments along the demand curve.

Price(P)	Quantitiy demanded (Q)	Total Renenue (TR)	Marginal Revenue (MR)	Price elasticity of demand
5	0
4.5	1
4	2
3.5	3
3	4
2.5	5
2	6
1.5	7
1	8
0.5	9
0	10

lavendermule614

From the scenario for Katrinaâs Candies, examine the procedure Herb will use to estimate the "demand model" for this product and comment on the expected price elasticity, income elasticity, and cross price elasticity of demand. That is, do you expect demand to be price elastic or inelastic? Will the income elasticity suggest Katrina Candies is a luxury or a necessary good? And, is there likely to be a strong cross price elasticity with the other products that Herb included in his demand model? Explain your answers. What can you determine about consumer demand for a product whose estimated demand elasticities are as follows: Price Elasticity of demand is -0.85 Income Elasticity of demand is 2.5 Cross Price Elasticity of demand with this product and your product is -2 I would like you to think about this simple formula for predicting the change in total revenue when there is a given percentage change in price. Using the example above, if ED (price elasticity of demand) is -.85, then a 10% increase in price will cause the quantity demanded to fall by 8.5%, (-8.5% / 10% = -.85). The Formula for Predicting % Changes in Total Revenue is: %ÎTR = %ÎQ + %ÎP where TR = Total Revenue, Q is Quantity Demanded and P = price. Using this formula, what would be the % Î in TR if ED is -.85 and the %ÎP is 10%?

lilaccattle807

ECON 1900 Study Guide - Demand Curve

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