LAW OF DEMAND Apply this Scenario on IKEA COMPANY Scenario 2: a. If the company decides to earn more profits and hence decide to increase the price of their product. Use a numerical table of price and demand to explain. b. What effect this increase in prices will have on consumers demand? Is it called a change in quantity demand or change in demand? Why? c. Draw and show this effect with the help of a demand curve.

LAW OF DEMAND Apply this Scenario on IKEA COMPANY Scenario 2: a. If the company decides to earn more profits and hence decide to increase the price of their product. Use a numerical table of price and demand to explain. b. What effect this increase in prices will have on consumers demand? Is it called a change in quantity demand or change in demand? Why? c. Draw and show this effect with the help of a demand curve.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 28CTQ: Would you expect supply to play a more significant role in determining the price of a basic...

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According to the previous discussion, what factors influence the price elasticity of demand for cigarettes? What other factors not mentioned in the article might influence the price elasticity of demand for cigarettes?
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?
Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
Can you think of an industry (or product) with near infinite elasticity of supply in the short term? That is, what is an industry that could increase Qs almost without limit in response to an increase in the price?
The equation for a demand curve is P=2/Q. What is the elasticity of demand as price falls from 5 to 4? What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same?
Explain how the demand curves for normal productsand to, prestige products differ. What are demandshifts and why are they important to marketetS? Howdo firms go about estimating demand? How can marketetS estimate the elasticity of demand?
Supply and Demand The table below gives thequantity of graphing calculators demanded and thequantity supplied for selected prices.a. Find the linear equation that gives the price as afunction of the quantity demanded.b. Find the linear equation that gives the price as afunction of the quantity supplied.c. Use these equations to find the market equilibriumprice.
9. Application: Elasticity and hotel rooms The Inlinwing graph input tool shows the daily demand for hotel moms at the Oceans Hotel and Casino in Atlantic City, New Jersey. To help the hotel management better understand the market, an woonomist identified three primary factors that affect the demand for me ach night. The demand factum, lung with the values corresponding to the initial demand curve, are shown in the following table and alungside the graph input tool. Demand Factor Average American household income Roundtrip airfare from New Orleans (MSY) to Atlantic City (ACY) Room ratu at the Meadows Hotel and Casino, which is near the Ocean Use the graph input tool to help you answer the following questions. You wil not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Show Transcribed Text 600 450 ****** 100 0 Demand ++ 55155 366 350 351 350 100 ans…
QUESTIONS: Why do high-end hotels charge for Wi-Fi connections while lower-end hotels do not? What is the relationship between the price elasticity of demand for a hotel and whether it charges for Wi-Fi? ii. What is "add-on pricing"? Is an add-on price posted like a hotel rate is posted? Is Wi Fi upcharge an example of add-on pricing? Is free Wi-Fi at high-end hotels an effective loyalty inducement?
explain how the demand curves for normal productsand for prestige products differ. What are demandshifts and why are they important to marketers? Howdo firms go about estimating demand? How can marketers estimate the elasticity of demand?
1) Walkers’ Shoes reports the following demand schedule for its black brogues.Price 1600 800 400 200 100 50 25 12.5Quantity demanded 2 4 8 16 32 64 128 256a) For an increase in price from 50 to 100, calculate:i) The proportional change in price.ii) The proportional change in quantity demanded.iii) The price elasticity of demand for Walkers’ black brogues.b) Considering the demand schedule in the table, what do you conclude about the value of the price elasticity of demand for Walkers’ black brogues at every level of output? How would you classify the demand for such a good?c) What is the effect on Walkers Shoes’ total revenue of doubling the quantity of shoes which it supplies? What is the value of its marginal revenue? How does your answer relate to the value of the price elasticity of demand?d) The income elasticity of demand for Walkers’ Shoes is estimated to be 1.8. By how what percentage do you expect demand to increase if its customers’ incomes increase from 31,500 to 38,500?
a. Why is the concept of elasticity important to consumers? What does the average person need to know aboutelasticity to maximize their utility?b. Why or how does elasticity matter to firms?c. Why does it matter in tax or other government policy?