Answered: The table below shows two demand…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter7: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 5CQ: Estimates presented in Exhibit 5 show that Android users have a higher price elasticity of demand...

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The table below shows two demand schedules for a given style of men’s shoe—that is, how many pairs per month will be demanded at various prices at a men’s clothing store in Seattle called Stromnord.

Price	D₁Quantity Demanded	D₂ Quantity Demanded
$85	53	13
80	60	15
75	68	18
70	77	22
65	87	27

Suppose that Stromnord has exactly 70 pairs of this style of shoe in inventory at the start of the month of July and will not receive any more pairs of this style until at least August 1.

Instructions: Enter your answers as whole numbers.

a. If demand is D₁, what is the lowest price that Stromnord can charge so that it will not run out of this model of shoe in the month of July?

What if demand is D₂?

b. If the price of shoes is set at $85 for both July and August and demand will be D₂ in July and D₁ in August, how many pairs of shoes should Stromnord order if it wants to end the month of August with exactly zero pairs of shoes in its inventory?

What if the price is set at $65 for both months?

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