Based on 11 annual observations, the following regressions were obtained: ^ Model A: Y(sub t) = 2.6911 - 0.4795X(sub t) se = (.1216) (.1140) r^2 = .6628 ^ Model B: Y(sub t) = 0.7774 - .2530 ln X(sub t) se = (.0152) (0.0494) r^2 = 0.7448 where Y = the cups of coffee consum
Demand for cassette players can be characterized by the following:price elasticity=-2, cross-price elasticity with AAA batteries=-1.5, and income elasticity =3. Indicate if True or False and why: a.A price increase for cassette players will decrease both the number of units demanded and the total revenue of sellers. b. The cro
Demand for cassettes can be characterized by the following point elasticities:price elasticity =-2,cross price elasticity with aaa batteries is -1.5, and income elasticity =3. please explain the following statement. a. A 3% price reduction in cassette players would be necessary to overcome the effects of a 2% decline in inco
During the past year,MP sold 150,000pairs of brake shoes at an average wholesale price of $13per pair. This year, GNP per capita is expected to fall from $21,000 to 19000 as nation enters a steep recession. Without any price change, MP expects current year sales to fall to 100,000. a. Calculate the implied arc income elastici
Market demand and cost revenue relations: P=$5000 -$0.25Q MR=$5000 - $0.5Q^2(squared) TC=$6,000,000 + $500Q +$0.5Q^2(squared) MC+$500+$1Q Marginal cost: $150 per unit, OSHA mandated safety feature A. Calculate profit-maximizing price/output combination and economic profit level before installation of the OSHA mandated shie
Suppose that successive price reductions reduce total revenue. The supplier faces a demand curve that is, in this region: A) price elastic. B) unitary elastic. C) infinitely price elastic. D) of indeterminate elasticity. E) price inelastic.
If demand is relatively price inelastic: A) a 1 percent increase in price evokes a less than 1 percent decrease in quantity demanded. B) a 1 percent increase in price evokes a larger than 1 percent decrease in quantity demanded. C) a 1 percent decrease in price evokes a larger than 1 percent increase in quantity demande
In 1979, in a isolated small town, 100,000 bricks were sold at $1.20 per brick. In 1980, 120,000 bricks were sold at $1.50 each in the same town. This data could provide evidence of: A) a totally elastic demand curve for bricks. B) an unitary elasticity of demand for bricks. C) a contraction in the supply of bricks ov
The price elasticity of supply shown in the diagram below, between points A and B is: A) 0.1 B) 0.5 C) 1.0 D) 5.0 E) none of the above
If at a price of $10, quantity bought will be 5400 per day, and at $15, quantity bought will be 4600 per day, then the price elasticity of demand is approximately: A) 0.2. B) 0.4. C) 0.6. D) 2.5. E) 6.0.
See attachment
Elasticity Estimation. Breakaway Tours, Inc., has estimated the following multiplicative demand function for packaged holiday tours in the Flushing, NY, market using quarterly data covering the past five years (20 observations). (ss) = subscript (SS) = superscript Q(ssy) = 5P(ssy)(SS-2.5)P(ssx)(SS1)A(ssy)(SS2)A(ssx)(SS1)I
If P1 =$5, Q1 =10,000, P2=$6 and Q2=5000, then at point P2 the point price elasticity Ep equals: a. -6 b. -2.5 c. -4.25 d. -0/12
The demand for Penn's Oil motor oil can be characterized by the following point elasticities: price elasticity= -2.5,cross-price elasticity w/Value Lean motor oil=1.5,income elasticity= 0.75.Indicate if statement is true or false and explain your answer. THE CROSS-PRICE ELASTICITY INDICATES THAT A 2% INCREASE IN THE PRICE OF VA
The demand for Penn's oil motor oil can be characterized by the following point elasticities: price elasticity=-2.5,cross-price elasticity with Value Lean motor oil = 1.5,and income elasticity=0.75. Indicate whether statement is true or false and explain your answer. A 0.9%price reduction for Penn's Oil would be necessary to ov
Please see the attached file for full problem description.
Please see the attached file for full problem description. Solutions:1 a) If Twinkies cost $0.10 each and Slice costs $0.25 per cup, what is his budget constraint? Write down the budget equation and draw the budget line: Budget constraint $0.10T + $0.25S = $1 to draw the budget line: for example consider this two
Please see the attached file for full problem description. --- Each day Paul, who is in third grade, eats lunch at school. He likes only Twinkies (T) and Orange Slice (S), and these provide him a utility of Utility = U (T, S) = Every day his mother gives him $1 to spend on lunch. Assume that it is possible to purchase fr
Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $5 and the government wants to reduce smoking by 20%, by how much should it increase the price? What is the new price? Use the midpoint method in your calculations.
Government wants to maximize its tax revenue and it can place only $2 per-unit tax on one of two goods. It should place the tax on the production of the good whose demand curve has the: A) higher price elasticity of demand B) lower price elasticity of demand C) greater length D) shorter length
As price falls from $4 to $3, quantity supplied falls from 400 units to 350 units. Price elasticity of supply is: A) 0.95 B) 1.20 C) 2.22 D) .50
A. Calculate the profit-maximizing activity level. B. Calculate the company's optimal profit and return-on-sales levels. A. When quantity is expressed as a function or price, what are the Florida demand and supply curves if p = $11, Ps = $5, Y = $12,000 billion, T = 75 degrees, and PI = $6, and PK = 12.5%. B. Calculate the
How supply and demand analysis can be extended to illuminated many issues such as low incomes in agriculture and the pattern of taxation by government; How selfish behaviour in a market system acts like the "invisible hand" of a social planner to allocate society's resources efficiently; and How the invisible hand fights back
Sample question and answer for determining the elasticity of demand, sample application of elasticity of demand formula. See the attached file. Application of Elasticity of Demand formula: Calculate the elasticity of the demands by using the above table.
If the market demand curve is Q=100-p. What is the market price elasticity of demand? If the supply curve of individual firms is q=p and there are 50 identical firms in the market, draw the residual demand facing any one firm. What is the residual demand elasticity facing one firm at the competitive equilibrium?