7. If the price elasticity of demand for a good is -0,5 and the firm increases the price of this good by 10%. What change would we expect to see in the demand for this product? a) Increase of 20% b) Increase of 5% c) Decrease of 10% d) Decrease of 5% If the price elasticity of demand for a product is -2,5 and the firm increases the price of this good by 5%, what will be the change in the demand for this product? 8. a) Decrease of 50% b) Increase of 2% c) Decrease of 2% d) Decrease of 12,5% In an economic recession, which kind of good would experience a rise in sales? a) Luxury 9. b) Necessity c) Inferior d) Normal

7. If the price elasticity of demand for a good is -0,5 and the firm increases the price of this good by 10%. What change would we expect to see in the demand for this product? a) Increase of 20% b) Increase of 5% c) Decrease of 10% d) Decrease of 5% If the price elasticity of demand for a product is -2,5 and the firm increases the price of this good by 5%, what will be the change in the demand for this product? 8. a) Decrease of 50% b) Increase of 2% c) Decrease of 2% d) Decrease of 12,5% In an economic recession, which kind of good would experience a rise in sales? a) Luxury 9. b) Necessity c) Inferior d) Normal

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 2PA

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Similar questions

The price elasticity of the demand for gasoline is -0.02. The price elasticity of demand for gasoline at Joe’s 66 station is -1.2. Explain what might account for the different elasticities.
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
Suppose Erin, the owner-manager of a local hotel projects the following demand for her rooms: a. Calculate the price elasticity of demand between 90 and 110. b. Is the price elasticity of demand between 90 and 110 elastic, unit elastic, or inelastic? c. Will Erins total revenue rise if she increases the price from 90 to 110? d. Calculate the price elasticity of demand between 110 and 130. e. Is the price elasticity of demand between 110 and 130 elastic, unit elastic, or inelastic? f. Will Erins total revenue rise if she increases the price from 110 to 130?
The price elasticity of demand for personal computers is estimated to be 2.2. If the price of personal computers declines by 20 percent, what will be the expected percentage increase in the quantity of computers sold?
If the midpoint on a straight-line demand curve is at a price of $7, what can we say about the elasticity of demand for a price change from $12 to $10? What about from $6 to $4?
(Price Elasticity of Supply) Calculate the price elasticity of supply for each of the following combinations of price and quantity supplied. In each case, determine whether supply is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. a. Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 400 units. b. Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 500 units. c. Price falls from $2.25 to $1.75; quantity supplied remains at 600 units. d. Price increases from $1.75 to $2.25, quantity supplied increases from 466.67 units to 600 units.