{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 6 Problem 6 - CHAPTER[I'5 1What can you oouclude...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: CHAPTER [I '5. 1What can you oouclude about the price elasticiiq.r of demand in each of the following statements? I. “The pizza deliver].r business in this town is very competitive. I'd lose half to].r cus— tomers if] raised iile price by as little as 10%." file price elasticit}r of demand is fl=5 res-s So demand is elasiic. II. III owned hofll of fire two Jerry Garcia autographed lithographs In existence. 1 sold one on eiiia}r for a high price. But when i sold the second one, the price dropped by sofas." The fact filat itwas necessar].r for price to drop by 30% in order to sell one more unit [an increase in quanflty of sass, using,r the midpoint method} indicates that the demand for Jerry Garcia autographed lithographs is inelastic. moss _ 30% _ So demand is elastic. 1.25 1:. "My eoonomics professor has chosen to use the Krugmani'Wells textbook for flus class. I have no choioe but to hug.r mis hook." There is no substitute available, so demand Is inelastic. d. "i always spend a toinl of Elia-3thr $111] per week on coffee." Demand is unit—elastic: no matter what the price of coffee is. The total revenue to the producer {which is Il'ijl' total expenditure on coffee] remains the same. ...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online