Answers to chapter 5

Answers to chapter 5 - Solutions to End-of-Chapter...

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Solutions to End-of-Chapter Exercises Chapter 5 [20] Section 5.1 [20.1]: The Price Elasticity of Demand 1.1 quantity, price, absolute value 1.2 1.2 1.3 2.0, elastic 1.4 increases 1.5 increases Section 5.2 [20.2]: Using Price Elasticity to Predict Changes in Quantity 2.1 12 2.2 decrease, 6.7 2.3 26 2.4 reduce, 6 2.5 A price increase of 30% ( = 39/1.3) would be required to meet the target. 2.6 Except in the case of a monopoly, the demand for the product of an individual firm will be more elastic than the market demand for the product. A more likely elasticity for the company’s salt might be 2.0 or 3.0. 2.7 a. Ridership will decline by 6,000 passengers in the one-month period and by 16,000 riders over the two-year period. b. Revenue will increase over the one-month period, but decline over the two-year period. 2.8 Given an elasticity of 0.67, a 30% increase in price will decrease the quantity of hospital care by 20%, so you should send 20% fewer rolls, or 80 instead of 100. 2.9
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Answers to chapter 5 - Solutions to End-of-Chapter...

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