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homework # 4 - quantity is greater than the percentage...

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Dr. Popp AGEC 1103 2 March 2007 Homework IV 1. Point elasticity measures the elasticity of a given point on a demand curve, while arc elasticity measures the elasticity between two points on a demand curve. 2. Own price elasticity is the relative response of consumption of a good or service to changes in price. It equals the percentage change in quantity over the percentage change in price. 3a. The goods are complements of one another. 3c. The cross price elasticity is negative since the goods are complements. 4a.The own price elasticity is -1.38. 4b. The own price elasticity is -.47 4c. It is elastic. 4d. It is inelastic. 4e. The elasticities are different because from points a to b the percentage change in
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Unformatted text preview: quantity is greater than the percentage change in price, but from point b to c the percentage change in price is greater than the percentage change in quantity. 4f. Decreasing the price will drive revenue up since consumers will be better off, like lowering the price of Victoria’s secret merchandise. 4g. Increasing the price will increase revenue because it is inelastic and consumers will always be in need for this type of product no matter what the cost, like milk. 5. 1145 platters 6a.-1.8 6b.-1.57 6c. Inferior 6d .Inferior 7a. -3% 7b. Complement 8a. 8b. 8c....
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