Short-Run and Long-Run Price Elasticity
Not what you're looking for?
1. Estimate Short-Run and Long Run Price Elasticity of Demand for Selected Commodities, United States
Commodity Short-Run Long Run
Clothing 0.90 2.90
Household natural gas 1.40 2.10
Tobacco Products 0.46 1.89
Electricity (household) 0.13 1.89
Wine 0.88 1.17
Jewelry and watches 0.41 0.67
Gasoline 0.20 0.60
If the price increases by 10 percent by how much does the quantity of household (a) natural gas and (b) electricity change in the short run and the long run? (Hint: use the price-elasticity values).
2. Agricultural commodities are known to have a price-inelastic demand and to be necessities. How can this information allow us to explain why the income of farmers falls (a) after a good harvest? (b) In relation to the incomes in other sectors of the economy?
3. Why are tastes converging around the world? (b) What is the importance of this for U.S firms?
4. The total operating revenues of a public transportation authority are $100 million while its total operating costs are $120 million. The price of a ride is $1, and the price elasticity of demand for public transportation has been estimated to be -0.4. (a) By law, the public transportation authority adopt? Why? (b) What price per ride must the public transportation authority charge to eliminate the deficit if it cannot reduce costs?
5. A researcher estimated that the price elasticity of demand for automobiles in the United States is -1.2, while the income elasticity of demand is 3.0. Next year, U.S. auto makers intent to increase the average price of automobiles by 5 percent, and they expect consumers' disposable income to rise by 3 percent.
(a) if sales of domestically produced automobiles do expect U.S auto makers to sell next year? (b) By how much should domestic auto makers increase sales by 5 percent next year?
Purchase this Solution
Solution Summary
This solution provide detailed explanations and step-by-step equations for various questions regarding price elasticity.
Purchase this Solution
Free BrainMass Quizzes
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations