HomeworkLib
Question

You have the following information about the product and price of the product in your company:...

You have the following information about the product and price of the product in your company: Price increased from $ 5.00 to $ 8.00 Quantity demanded decreased from 5000 to 5500 Calculate the price elasticity of demand and give an example of a product that would reflect the answer.

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

P0 = $5

P1 = $8

Q0 = 5000

Q1 = 5500

It shall be noted that the question does not specify if the price elasticity of demand is to be measured at P0=5 or P1=8

Hence, under such situation arc-price elasticity of demand is generally computed.

The arc-price elasticity of demand is given by:

This shows that price-elasticity is 0.2063

Such low price-elasticity can be observed in case of life-saving medicines.

The quantity demanded change only by a margin relatively, no matter how large the change in the price

0 0
Add a comment
Know the answer?
Add Answer to:
You have the following information about the product and price of the product in your company:...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Pls answer these Managerial Economics questions: Q. 5. Example 1: You are given market data that...

    Pls answer these Managerial Economics questions: Q. 5. Example 1: You are given market data that says when the price of pizza is $4, the quantity demanded of pizza is 60 slices. When the price of pizza is $2, the quantity demanded of pizza is 80 slices. Calculate the price elasticity of demand and interpret what that number means. Q. 6. When the price of CD increased from $20 to $22, the quantity of CDs demanded decreased from 100 to...

  • You have the following demand for product X: Q = 200 - 0.30P. At a price...

    You have the following demand for product X: Q = 200 - 0.30P. At a price =$100, point price elasticity of demand is about A) -1.50 B) -0.176 C) can't be determined since the quantity demanded at p = $100 is not known D) -1.176

  • The price of a large pizza decreased from $23.00 to $19.00. As a result, the quantity...

    The price of a large pizza decreased from $23.00 to $19.00. As a result, the quantity demanded of skateboards increased from 260.00 to 280.00. Using the midpoint formula, what is the percentage change observed for the quantity demanded of skateboards? Give your answer to two decimal places. What is the cross-price elasticity of demand between pizzas and skateboards? Give your answer to two decimal places.

  • 5.4 Elasticity in Areas Other Than Price ractice 5.4 Elasticity in Areas Other Than Price Calculate...

    5.4 Elasticity in Areas Other Than Price ractice 5.4 Elasticity in Areas Other Than Price Calculate cross-price elasticity of demand Question The price of cups increased from $3.75 to $4.05 and the quantity demanded of plates decreased from 4.950 to 4.450. Calculate the cross-price elasticity of demand for plates, Round your answer to the nearest hundredth Provide your answer below. FEEDBACK MORE INSTRUCTION TFG M

  • Suppose that decreases in the price of milk lead to decrease s in the retail prices...

    Suppose that decreases in the price of milk lead to decrease s in the retail prices for ice cream by 4 per cent from last year while ice cream consumption is up 7 per cent. Given this information, calculate the price elasticity of demand for ice cream. Will the revenue received by ice cream suppliers have increased or decreased following the price decrease ? Briefly explain. The price elasticity of demand for ice cream is nothing. (Enter your response as...

  • Q2. If the price elasticity of supply was calculated as 0.40 for a product and the...

    Q2. If the price elasticity of supply was calculated as 0.40 for a product and the price increases by 12%, what would happen to the quantity supplied? A) Quantity supplied would increase by 6.3%. B) Quantity supplied would increase by 8%. C)Quantity supplied would increase by 4.8%. Q3. If you divide the change in quantity by the original quantity, you are calculating the A) percentage change. B) change in elasticity. C) quantity demanded change. Q4. The percentage change in quantity...

  • The price elasticity of demand for a firm’s product is equal to –0.8 over the range...

    The price elasticity of demand for a firm’s product is equal to –0.8 over the range of prices being considered by the firm’s manager. If the manager decreases the price of the product by 10 percent, the manager predicts the quantity demanded will _____________ (increase, decrease) by ______ percent. Select one: a. Increased by 8% b. Decreased by 80% c. Decreased by 3% d. Increased by 12.5%

  • The price of a large pizza decreased from $22.00 to $18.00. As a result, the quantity...

    The price of a large pizza decreased from $22.00 to $18.00. As a result, the quantity demanded of skateboards increased from 230.00 to 250.00 Part 1: Using the midpoint formula, what is the percentage change observed for the price of a large pizza? Give your answer to two decimal places. Part 2: Using the midpoint formula, what is the percentage change observed for the quantity demanded of skateboards? Give your answer to two decimal places. Part 3: What is the...

  • 16. Suppose that the price of one product increases from $11 to $42. As a result,...

    16. Suppose that the price of one product increases from $11 to $42. As a result, quantity demanded for another product changes from 260 to 180. Based on this information you can tell that these two products are (select one): a. complements b. normal C. substitutes d. inferior 17. Suppose that when the store increases the price of laundry detergent from $2.50 to $3.90, quantity demanded decreased from 210 to 130. What is the change in total revenue as a...

  • When the price of flowers increased from $5.00 to $5.70, the quantity demanded of chocolate increased...

    When the price of flowers increased from $5.00 to $5.70, the quantity demanded of chocolate increased from 5,550 to 6,150. What is the estimated cross-price elasticity of demand for chocolate? Round your answer to the nearest hundredth.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT