Knapp3 - WEEK 3 CH5, Q3 Using the midpoint formula,...

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WEEK 3 CH5, Q3 – Using the midpoint formula, calculate elasticity for each of the following changes in demand by a household. P1 P2 Q1 Q2 Demand for: Price elasticy for demand a. Long-distance telephone service $0.25 per min. $0.15 per min. 300 min. per month 400 min. per month -0.57 b. Orange juice 1.49 per qt 1.89 per qt 14 qt per month 12 qt per month -0.65 c. Big Macs 2.89 1.00 3 per week 6 per week -0.69 d. Cooked shrimp $9 per lb $12 per lb 2 lb per month 1.5 lb per month -1.00 CH5, Q7 – Taxicab fares in most cities are regulated. Several years ago, taxicab drivers in Boston obtained permission to raise their fares 10 percent, and they anticipated that revenues would increase by about 10 percent as a result. They were disappointed, however. When the commissioner granted the 10 percent increase, revenues increased by only about 5 percent. What can you infer about the elasticity of demand for taxicab rides? With this information I can infer that taxicab rides are more elastic than anticipated by
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This note was uploaded on 06/15/2010 for the course EC 142DLB taught by Professor Graceonodipe during the Spring '10 term at Park.

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Knapp3 - WEEK 3 CH5, Q3 Using the midpoint formula,...

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