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Elasticity of Demand and Supply, Production and Cost in the Firm

Answers the questions Question 1 When a government wants to increase tax revenue, they will often increase the sales tax on gasoline. Using price elasticity of demand, explain why the tax would be placed on gasoline rather than, say, yachts. What might be the long run effect of raising the price of gas? Question 2 Th

Calculate: Price Elasticity of Demand

Question: In 1991, Brazil and Columbia united to form a coffee cartel and reduce coffee output. Suppose total costs for the cartel are: TC = 12 + 5Q + Q2 Here Q is millions of pounds of coffee. The market demand curve for coffee is: P = 17 - Q Here P is millions of dollars per million pounds. Suppose before the cartel

Elasticity Problems

Please refer attached file for graphs. Problems : 1.It has been estimated that the price elasticity of demand for attending baseball games is .23. If price were the only factor to change, a rise in attendance of 10%, one could conclude that price of baseball tickets: a.fell by 43.48% b.rose by 43.48% c.fell by 2.3%

the implied arc income elasticity of demand

Unique is a leading manufacturer of powerful fully-loaded super light-weight laptop personal computers. Demand for Unique computers is tied to the overall pace of business sales and, therefore, is sensitive to changes in national income. The personal business computer industry is highly competitive, so Unique's demand is also ve

Elasticity concepts

Questions 1. Price elasticity of demand is the percentage change in price divided by the percentage change in quantity demanded. Ans: 2. If the price of a good goes up by 20 percent and the quantity demanded falls by 40 percent, the price elasticity of demand is 2. Ans: 3. If the price of corn goes up b

Elasciticy of demand

This year was prosperous for the Starbucks Coffee Company. revenues increased 9 percent, excluding the 1035 new retail outlets that were opened. suppose management attributes this revenue growth to a 5 percent increase in the quantity of coffee purchased. if Starbucks's marketing department estimates the income elasticity of

Elasticity of demand

Using the "arc formula" and the data from the table below, compute where possible the own- price and income elasticities of demand. (remember that these elasticities are computed holding all other variables constant). Price quantity price of related goods income $10 600 $20


Problems: 1)For each of the following cases, calculate the arc price elasticity of demand and state whether demand is elastic, inelastic or unit elastic a) when the price of milk increases from $2.25 to $2.50 per gallon, the quantity demanded falls from 100 gallons to 90 gallons b) when price of paper book falls fro

Accounting Firm Operating in a Competitive Market

See the attached file. 1. Is an accounting firm operating in a perfectly competitive market? Why or why not? 2. If the owner of the company ( accounting firm) asked you to assess whether or not they were using the optimal amount of an input (given a set price for that input), what economic criterion would you use in your ana

If CD's and MP3's are substitute goods and the price of MP3's rises

I need some help on some review questions, can you please help me? Review Questions 1. If CD's and MP3's are substitute goods and the price of MP3's rises (be careful because we don't know why the price of MP3's rises): A) the demand for CD's will fall and their price fall B) the demand curve for CD's wil

Price Elasticity

Define Price Elasticity and give information and example on the subject

Micro Economics

1. A major cereal manufacturer decides to lower prices from $3.60 to $3.00 per 15-ounce box. If quantity demanded increases by 18%, what is the price elasticity of demand? Is this an example of elastic or inelastic demand? 2. To increase state tax revenues, the Governor of California has proposed an additional sales tax on

Marginal Revenue: Price Elasticity

From this, please help to figure out the Marginal Revenues and associate it with price elasticity. Just a simple analysis will be fine. Server Performance Monitoring Price per server monitoring per month Windows $18 UNIX $20 SAP $22 Database $22 2008 rates Server Performance Monitoring Price per server monit

Managerial Economics

The firm's production function for gadgets, X, depends on the amounts of capital (K), and labor (L) employed: X = 56K + 8.8L - 2K2 - 0.1L2. (a) If the firm can sell any output at a price equal to 10, if the wage rate per unit of labor is 8 and the rental per unit of capital is 80, what is the prof

Price Elasticity Demand of IT Services

I need help with this problem. Thanks. Estimating and analyzing the elasticity of demand for IT services 2007 prices Server Performance Monitoring Price per server per month Windows $ 18 UNIX $ 20 SAP $ 22 Database $ 22 2008 prices Server Performance Monitoring Price per serve

Demand curve of a monopolist

Suppose the demand curve faced by a monopolist is: q=p^-a where a>0 The total cost for the monopolist are C=sq a) Find the profit maximizing level of output. b) Specify the first and second order condition for profit maximization. c) What is the price elasticity of demand faced by this monopolist d) What hap

Elasticity of demand

1.If the price of capital is $24, the price of labor is $15, and the marginal product of capital is 16. Using the above information, answer the following a- The least costly combination of capital and labor requires that the marginal product of labor be ________.? b- At the least cost point in a, the slope of the isocost l

Explaining Demand Equation for Potato

The market demand for potatoes is estimated as follows Log Q = 1.5 - .33log P + 0.3log I + 200log P' Q = pounds per year, P = price of potatoes in cents per pound, I = Average income of consumers, and P' = price of rice per pound. All the parameters are statistically significant at the 1 percent level. Provide a

Demand elasticity

Suppose the demand for beer is characterized by the following point elasticities: own price elasticity = -2.5 cross-price elasticity with soda = +3 income elasticity = +2 Based on the given elasticities, answer the following. Explain your answers. a. If a firm in the industry wishes to increase total sales revenue (ignori

Elasticity of Demand

In your own words without quoting anyone: 1. What is elasticity of demand and how is the notion used in economics? Please explain and elaborate.


I need help with these questions , 2 question.

Discusing Price Elasticity of Demand

What is the definition of price elasticity of demand? Explain the relationship between price elasticity and total revenue? How does price elasticity of demand affect a firm's pricing decisions? How does the availability of substitutes affect price elasticity of demand? Provide examples to support your answers.

Optimal Markup: Optimal Markup. Jerry Jones is a managing partner of Camden & Associates, Inc., a New York based management-consulting firm. Jones has asked you to complete an analysis of profit margins for Norton Inc., a client firm. Unfortunately, your predecessor on this project was abruptly transferred, leaving only sketchy information on the client's pricing practices.

Optimal Markup. Jerry Jones is a managing partner of Camden & Associates, Inc., a New York based management-consulting firm. Jones has asked you to complete an analysis of profit margins for Norton Inc., a client firm. Unfortunately, your predecessor on this project was abruptly transferred, leaving only sketchy information on

Price elasticity of demand

Quantity Price Elasticity Demanded 100 $ 5 80 $10 60 $15 40 $20 20 $25 10 $30 1. Determine the price elasticity of demand at each quantity demanded using the formula % chg in QD divided by % chg in price. 2. Redo #1 using price changes of $

Price Elasticity and Inelastic Demand

We recently added the STARZ Network to our premium cable tier. Currently, 852 of our basic service subscribers purchase this service at our current price of $10.50 per month. As you know, our current contributions from STARZ are not as high as we expected. I would like you to evaluate our current price to see if we might be abl

Price Elasticity

Suppose the price elasticity of demand for cigarettes is - 0.46 in the short run and -1.89 in the long run, the income elasticity of demand for cigarettes is 0.50 and the cross-price elasticity of demand between cigarettes and alcohol is -0.70 Suppose also that the price of cigarettes, the income of consumers, and the price of