# In summer 2007 sony decided to cut the price of its

• Homework Help
• 17
• 96% (47) 45 out of 47 people found this document helpful

This preview shows page 15 - 17 out of 17 pages.

36. In summer 2007, Sony decided to cut the price of its Playstation 3 video game console from \$600 to \$500. One industry analyst forecast that the price cut would increase sales from 80,000 units per monthto 120,000 units per month. Assuming the analyst’s forecast is correct, calculate the price elasticity of demand for Playstation 3.
15
37. On most days, the price of a rose is \$1, and 8,000 roses are purchased. On Valentine’s Day, the price of a rose jumps to \$2, and 30,000 roses are purchased. a)Draw a demand and supply diagram that shows why the price jumps.b)Based on this information, what do we know about the price elasticity of demand for roses? What do we know about the price elasticity of supply for roses? Calculate values for the price elasticity of demand and the price elasticity of supply or explain why you can’t calculate these values? 38. The Delaware River Joint Toll Bridge Commission increased the toll on the bridges on route 22 and Interstate 78 from New Jersey to Pennsylvania from \$.50 to \$1.00. Use the information in the table to answer the questions. (Assume that nothing other than the toll change occurred during the months that would affect consumer demand.) Number of Vehicles Crossing the BridgesMonthTollRoute 22 BridgeInterstate 78 BridgeNovember\$.50519,337728,022December\$1.00433,691656,257a)Calculate the price elasticity of demand for each bridge..1616
.10
b)The total revenue collected by the commission from these bridges in November was _\$623,680
17