ECO 353 Study Guide - Quiz Guide: Inferior Good, Seating Capacity, Marginal Revenue

99 views3 pages

orangegnat648

3 Mar 2019

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

A firm has estimated the following demand function for its product: Use the point formulas to complete the elasticity calculations indicated below. (i) calculate quantity demanded. (ii) calculate the price elasticity of demand. Is demand elastic, inelastic, or unit elastic? (iii) calculate the income elasticity of demand. Is it a necessity or a luxury? (iv) calculate the advertising elasticity of demand. The price of a good increases from to and, as a result, the quantity of the good demanded declines from 120 to 80. Calculate the price elasticity of demand using the arc formula and determine whether demand is elastic, inelastic, or unit elastic. The demand function for good x is defined as qx = 20 - 0. 5px + 1. 2py, where py is the price of. Calculate the price elasticity of demand using the point formula for px =12 and py =10.

Related Questions

12. When prices are (P1, P2)= (1,2), the consumer demands (X1, X2) = (1,2). When prices are (Q1, Q2) = (2,1), the consumer demands (Y1, Y2) = (2,1). Is this consumer behavior consistent with the Weak Axiom of revealed preference?

13. Prove that elasticity of demand is not constant along a linear demand curve.

14. Prove that expenditure share weighted sum of income elasticities equal 1.

15. Prove that both goods cannot be superior or inferior at the same time.

16. Relate elasticity of demand with different slopes of the demand curve.

17. The equation to the Engel's curve of a commodity is X = 50+2M². Calculate the income elasticity of demand at M=$100. What can you infer about the nature of the commodity?

18. Calculate the own-price elasticity of demand for the demand curve P= 15-3X at prices and compare the outcomes.

a) P=0

b) P=1/8

c) P=3

d) P=15

raspberrygrasshopper609

Ch. 6: Simple Pricing

a. define the Law of Demand?

b. Explain the distinction between a change in demand and a change in quantity demanded?

c. create a demand curve from a simple demand schedule in Table 6.2?

d. determine the calculated values in a table such as Table 6.4?

e. Can you apply your understanding of Chapter 4s marginal analysis to pricing decisions in a price-making (versus price-taking) firm?

f. Can you explain in words what Own Price Elasticity, Cross-Price Elasticity, and Income Elasticity mean?

g. Given specific values for Own-Price Elasticity of Demand, can you determine whether demand for the good is elastic, inelastic, or unit elastic?

h. Given specific values for Cross-Price Elasticity, can you determine whether the two goods are substitutes or complements?

i. Given specific values for Income Elasticity, can you determine whether the good is a normal or inferior good?

j. Can you calculate each of these elasticities, such as in the homework?

k. Identify relatively elastic and inelastic demand curves?

l. List factors that may affect demand elasticity.

m. Indicate whether total revenue will increase or decrease as a result of a price change, depending on the demand elasticity?

The textbook used for this assignment is Managerial Economics, Froeb Chapters.

rubylouse898

1. The concept of price elasticity of demand measures:

a. the slope of the demand curve.

b. the number of buyers in a market.

c. the extent to which the demand curve shifts as the result of a price decline.

d. the sensitiveness of quantities demanded to price changes.

2. When the percentage change in price is less than the resulting percentage change in quantity demanded:

a. demand is elastic.

b. demand is inelastic.

c. demand is unit elastic.

d. none of the above.

3. The elasticity of demand:

a. will be the same at each price-quantity combination on a stable demand curve.

b. tends to be elastic in high-price ranges and inelastic in low-price ranges.

c. tends to be inelastic in high-price ranges and elastic in low-price ranges.

d. is infinitely large for a perfectly inelastic demand curve.

4. Suppose that as the price of Y falls from $2.00 to $1.80 the quantity of Y demanded increases from 110 to 121. It can be concluded that the price elasticity of demand is: _______.

5. Total revenue rises as the price of a good increases if price elasticity of demand is:

a. unitary elastic

b. perfectly inelastic.

6. The demand for such products as salt, bread, and electricity tend to be:

a. relatively price elastic.

b. relatively price inelastic.

c. of unit price elasticity.

d. perfectly price elastic.

coffeeelephant81

ECO 353 Study Guide - Quiz Guide: Inferior Good, Seating Capacity, Marginal Revenue

Document Summary

Get access

Related textbook solutions

Principles of Economics

Principles of Macroeconomics

Principles of Microeconomics

Related Documents

ECO 353 Study Guide - Quiz Guide: Monopsony, Ferrari P, Efficient-Market Hypothesis

ECO 353 Study Guide - Quiz Guide: Marginal Revenue, Formal Wear, Price Discrimination

ECON101 Lecture 5: econ

Related Questions