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price elasticity of demand

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1.Calculate the price elasticity of demand when the price of milk increases from $2.25 to $2.50 per gallon and the quantity of milk demanded falls from 100 to 90 gallons. Use the method for calculating price elasticity found in your text.
Do NOT include any symbols other than a negative sign or decimal point in your answer. If you use a negative sign, do not leave a space between it and the number.
2. Calculate the price elasticity of demand when the price of paperbacks falls from $7.50 to $6.50 and the quantity demanded increases from 100 to 150. Use the method for calculating price elasticity found in your text.

Do NOT include any symbols other than a negative sign or decimal point in your answer. If you use a negative sign, do not leave a space between it and the number.

3. Calculate the price elasticity of demand when rents on apartments increase from $500 to $550 and the quantity demanded decreases from 1000 to 950. Use the method for calculating price elasticity found in your text.
Do NOT include any symbols other than a negative sign or decimal point in your answer. If you use a negative sign, do not leave a space between it and the number

4.Calculate the point price elasticity of demand using the following demand curve and assuming price equals $50.
Qx = 5000 - 50 Px

5. Calculate the point price elasticity of demand using the following demand curve and assuming price equals $75.
Qx = 5000 - 50 Px

6. Calculate the point price elasticity of demand using the following demand curve and assuming price equals $25.

Qx = 5000 - 50 Px

7. Fill in the blanks using one of the words in the parenthesis before it. Use only one of the words or your answer will be marked incorrect.
If the income elasticity of demand is equal to -0.9, the product is considered a(n) (normal/inferior/luxury) good. If the cross-price elasticity of demand between two products is equal to 2.0, they are considered (complements/substitutes) . If the cross-price elasticity of demand between two products is equal to -0.5, they are considered (complements/substitutes)

8. The t-statistic for price is equal to 8.83, indicating that the price variable is (significantly/not significantly) different from zero. The t-statistic for " general staff performance" is equal to 0.74, indicating that this variable is (significantly/not significantly) different from zero. The R2 (R-squared) for the equation is 0.80, indicating that (.8, 8, 80, .2, 2, 20) percent of the variation in the dependent variable is explained statistically by the variables included in the equation. The F statistic is equal to 100, indicating that the good of fit of the regression equation based on the join influence of all the variables in the equation is (good/not good)

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Solution Summary

The price elasticity of demand is uncovered.

$2.19
See Also This Related BrainMass Solution

Economics

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 from $7.00 to $6.50, quantity demanded rises from 100 to 150
c) when the rent on apartments rises from $500 to $550, the quantity demanded decreases from 1000 to 950 2)

2. For each of the following cases, calculate the point price elasticity of demand and state whether demand is elastic, inelastic or unit elastic. The demand curve is given by
Qd=5000-50Px

a) The price of product is $50
b) The price of product is $75
c) The price of product is $25

3. For each of the following cases, what is the expected impact on the total revenue of the firm. Explain your answer
a) Price elasticity of the demand is known to be -0.5, and the firm raises the price by 10%
b) Price elasticity of the demand is known to be -2.5, and the firm lowers the prices by 5%
c) Price elasticity of the demand is known to be 1, and the firm raises the prices by 1%
d) Price elasticity of the demand is known to be 0, and the firm raises the prices by 50%

4.The demand curve is given by
Qd=500-2Px
a) What is the total revenue function
b) The marginal revenue function is MR=250-Q
Graph the total revenue function, Demand curve and marginal revenue function c) c) At what price is revenue is maximised, What is the revnue at that point
d) Identify the elastic and inelastic portions of demand curve

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