Groupassignment2F10 - 1 Calculate the price elasticity of...

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Unformatted text preview: 1. Calculate the price elasticity of demand at points A, C and E on the demand curve below. 2. The schedule below shows the number of packs of bagels bought in Davis, California, each day at a variety of prices. a. Graph the daily demand curve for packs of bagels in Davis. b. Calculate the price elasticity of demand at the point on the demand curve at which the price of bagels is $ 3 per pack. c. If all bagel shops increased the price of bagels from $ 3 per pack to $ 4 per pack, what would happen to total revenues? d. Calculate the price elasticity of demand at a point on the demand curve where the price of bagels is $ 2 per pack. e. If bagel shops increased the price of bagels from $ 2 per pack to $ 3 per pack, what would happen to total revenues? Price of Bagels per Pack 6 5 4 3 2 1 0 Numbers of Packs per day 0 3000 6000 9000 12000 15000 18000 3. Is the demand for a particular brand of car, like a Chevrolet, likely to be more or less price‐ elastic than the demand for all cars? Explain. 4. A 2 percent increase in the price of milk causes a 4 percent reduction in the quantity demanded of chocolate syrup. What is the cross‐ price elasticity of demand for chocolate syrup with respect to the price of milk? Are the two goods complements or substitutes? 5. What are the respective price elasticities of supply at A and B on the supply curve shown in the accompanying figure? 6. Martha’s current marginal utility from orange juice is 75 utils per ounce and from coffee 50 utils per ounce. Orange juice costs 25 cents per ounce and coffee 20 cents per ounce. Is she maximizing utility? If no, how should she change her spending? 7. From the demand curve below, find the consumer surplus if gasoline sells for $2 per gallon. 8. The buyers of tickets for an amusement park are 2 whose demand functions are below: a. Graph the market demand curve b. Calculate the consumer surplus if tickets sell for $12. ...
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