Chp 5-6 1. A. Ed= 2.5 - Elastic Demand- a price increase would reduce total revenue resulting in an increase in total revenue B. Ed= 0.8 – Inelastic demand – a price increase would increase total revenue and reduce total revenue. 2. A. 400-600/600=-.33%/-.2222= -1.5 B. 500-600/600= -.75/-.2222= -.75 (both inelastic because they are less than 1) 3. A. Diamonds B. Nasal decongestant spray C. Breakfast cereal (These all have a greater availability of substitutions-more elastic) D. Gasoline
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gouging. This is because there is no change in the good provided or the cost of manufacturing that good. Producers are simply using the consumers’ emergency demand for plywood to boost profits for themselves. Another example is the rise in essential items prices when there is a curfew in riot affected areas. For the producer this makes sense as demand becomes inelastic in times of emergencies and he can charge a higher price and increase his profits. “Everyone engaged in a business who…engages in a policy
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developed through years of experience in the market. It is impossible to imitate such an effective distribution system by the new entrants. Question 2 Elasticity of Demand There are four general determinants of elasticity of demand. Only three are relevant; the fourth is time. This means that the longer the time period the higher the elasticity
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Project part I product | Estimated elasticity | Barnes & Noble books | -4.00 | Coca-Cola | -1.22 | Cigarettes | -0.25 | Beer | -0.23 | Gasoline | -0.06 | BARNES & NOBLE BOOKS Barnes & Noble Books are elastic. The price of elasticity is always negative. In comparing elasticities we are interested in their size. So we drop the minus sign and compare their absolute values. The estimated elasticity is 4.00 which are greater than the absolute value of 1.00 so this good is elastic
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discuss how high entry barriers into a market structure will influence long-run profitability of the firms. Competitive pressures that are present in markets with high barriers to entry will be explained. Then the paper will discuss the price elasticity of demand in each market structure and its effect on pricing of its products in each market. After that a description of how the role of government affects each market structure’s ability to price its products will be provided. Finally, the effect of
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Price Discrimination in the Airline Market: The Effect of Market Concentration Joanna Stavins * Federal Reserve Bank of Boston 600 Atlantic Avenue Boston, MA 02106 (617) 973-4217 e-mail: joanna.stavins@bos.frb.org November 25, 1996 * Economist, Federal Reserve Bank of Boston. The views expressed in this paper are those of the author and do not necessarily reflect the official views of the Federal Reserve Bank of Boston or the Federal Reserve System. Price Discrimination in the
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Problems #2 Key 1. One feature of pure monopoly is that the demand curve: A) is vertical. B) is horizontal. C) slopes upward. D) slopes downward. Answer: D 2. The demand curve confronting a nondiscriminating pure monopolist is: A) horizontal. B) the same as the industry's demand curve. C) more elastic than the demand curve confronting a competitive firm. D) derived by vertically summing the individual demand curves for the buyers. Answer: B 3. Under pure monopoly, a profit-maximizing
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Pepsi, A reflection on its price & income elasticity Laura-Ashley Williams Colorado Technical University Author Note This paper was prepared for [ECON212], [CS13-01], taught by [Professor James Pirner] on [July 23, 2014]. Introduction The product chosen was Pepsi. It is a product produced by PepsiCo, which is one of the world's top marketer of premium juices and soft drinks. PepsiCo offers products to over 200 countries and territories, and our Global Brands are our biggest sellers
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Supply and Demand Lisa Krezman ECO/365 October 21, 2013 Ramaling Iyer Supply and Demand Atlantis a small city with a distinguished atmosphere that has paternal for grow. A company Goodlife is looking at the effects of supply and demand on two- bedroom apartment rental. Goodlife is a property management company that manages seven apartment complexes with two-bedroom unit for rent in Atlantis. Currently, Goodlife who has monopolized the rental units in the Atlantis area is the only company
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Specifically, it further examines the suggestion for heavy tax on alcohol concerning the elasticities of demand for alcohol. Question 1: Using the data provided in the article, calculate the price elasticity of demand for alcohol. According to Jackson, McIver and Wilson (2012, p.153), own-price elasticity of demand which is simply know as elasticity of demand is a way to measure the sensitiveness of consumers’ demand to a change in the product’s price, and the formula to calculate it is the percentage
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