This analysis assessment has three parts. It is required to show the formula prior to your complete calculation.

Part I. Using the midpoint method, calculate and interpret the price elasticity of demand for the following situation: a.When the price of oranges increases from $1.00 per pound to $1.50 per pound, quantity demanded falls from 500 pounds to 400 pounds. Calculate the price elasticity of demand.
b.Is the demand for oranges price elastic, inelastic, or unit elastic? Explain.
c.Calculate total revenue before and after the price change. How does that relate to the elasticity interpretation?
Part II. Given the following information, calculate the income elasticity of demand using the midpoint formula.a.Nancy's income increases from $20,000 to $30,000 and her consumption of spaghetti changes from 10 pounds per month to 2 pounds per month. Calculate the income elasticity of demand.
b.Interpret the result.
Part III. Given the following information, calculate the cross-price elasticity of demand.a.The quantity of Pepsi purchased rises by 15% when the price of Coca-Cola rises by 30%. Calculate the cross-price elasticity.
b.Interpret the result.

Solution Summary

The problem set deals with question in economics regarding price elasticity.

A widget manufacturer sold 10,000 widgets for $2.50 each. Total fixed costs are $5,000 and variable costs per unit are $.80.
(a) Given this information, what is the total profit for this production run?
(b) Marketing research indicated that the priceelasticity demand coefficient for the widgets is 2.5.
(c) The facto

Demand for a managerial economics text is given by Q=20,000-300P. The book is initially priced at $30.00.
a. Compute the point priceelasticity of demand at P=$30
b. If the objective is to increase total revenue, should the price be increased or decreased? Explain.
c. Compute the arc priceelasticity for a price decrease fr

Suppose the price of apples rises from $3 a pound to $3.50 and your consumption of apples drops from 35 pounds of apples a month to 20 pounds of apples. Calculate your priceelasticity of demand of apples. What can you say about your priceelasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure to s

Your company has developed a drug called Matrox that is an effective treatment for migraine headaches. You have just discovered that it can also be used for organ transplant patients to reduce the risk of organ rejection. The demand for migraine medications is considerably more
elastic than the demand for drugs to reduce the ri

Suppose the own-priceelasticity of demand for good X is -0.5, and that the price of good X increases by 10%. What would you expect to happen to the total expenditures on good X?
A. increase.
B. decrease.
C. unchanged.
D. none of the above.

I need help with this question. I think the customer will carry the burden but not sure. I believe the answer has something to do with elasticity as well. Not sure how to tie it all together.
Question:
Who would bear the brunt of a national sales tax on tobacco products? Why?

The demand schedule for the product 'xyz' is given below:
Price($) Quantity demanded
3 20
4 15
5 11
6 9
7 7
Task: Based on the above data, solve the questions given below:
Compute the point priceelasticity of demand for an increase in the p

1. Determine the priceelasticity of demand at each quantity demanded using the formula: Percentage change in quantity demanded = (Q2-Q1)/Q1 divided by percentage change in price = (P2-P1)/P1
b. Redo exercise 1a using price changes of $10 rather than $5
c. Plot the price and quantity date given in the demand schedule. Indi