Suppose the Daily Graphic Newspaper estimates that if it raises the price of its newspaper from Ghc1.00 to Ghc1.50 then the number of subscribers will fall from 50,000 to 40,000. a. What is the price elasticity of demand for the Daily Newspaper when elasticity is calculated using the midpoint method? b. What is the advantage of using the midpoint method? c. If the Daily Newspaper's only concern is to maximize total revenue, should it raise the price of a newspaper from Ghc1.00 to Ghc1.50? Why or why not? d. Suppose there is an increase in consumers' incomes. In the market for automobiles (a normal good), does this event cause an increase in demand or an increase in quantity demanded? Does this cause an increase in supply or an increase in quantity supplied? (Explain. NB: Explanation must not be more than half a page.) e. Suppose there is an advance in the technology employed to produce automobiles. In the market for automobiles, does this event cause an increase in supply or an increase in the quantity supplied? Does this cause an increase in demand or an increase in the quantity demanded? Explain NB: Explanation must not be more than half a page. f. The demand and supply functions for two related commodities A and B in two different markets are defined below: QdA= 410-5PA-2PB QdB= 295-PA-3PB QsA= -60+3PA QsB= -120+2PB i. Find the equilibrium conditions in the two markets ii. How are goods A and B related? Explain your
Suppose the Daily Graphic Newspaper estimates that if it raises the price of its newspaper from
Ghc1.00 to Ghc1.50 then the number of subscribers will fall from 50,000 to 40,000.
a. What is the
calculated using the midpoint method?
b. What is the advantage of using the midpoint method?
c. If the Daily Newspaper's only concern is to maximize total revenue, should it raise the
price of a newspaper from Ghc1.00 to Ghc1.50? Why or why not?
d. Suppose there is an increase in consumers' incomes. In the market for automobiles
(a normal good), does this event cause an increase in demand or an increase in quantity
demanded? Does this cause an increase in supply or an increase in quantity supplied?
(Explain. NB: Explanation must not be more than half a page.)
e. Suppose there is an advance in the technology employed to produce automobiles. In
the market for automobiles, does this event cause an increase in supply or an increase
in the quantity supplied? Does this cause an increase in demand or an increase in the
quantity demanded? Explain NB: Explanation must not be more than half a page.
f. The demand and supply functions for two related commodities A and B in two different
markets are defined below:
QdA= 410-5PA-2PB QdB= 295-PA-3PB
QsA= -60+3PA QsB= -120+2PB
i. Find the equilibrium conditions in the two markets
ii. How are goods A and B related? Explain your
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