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##### FIU ECO2023 Assignment: HW04 - Chapter 06 SPRING 14

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Question;q1question and Exercise 6-1;Determine the price elasticity of demand if, in response to an increase;in price of 10 percent, quantity demanded decreases by 20 percent.Instructions: Round your;answer to 2 decimal places..;Is demand elastic or inelastic: Explanation;E = Percentage change in quantity/Percentage change in price = 20/10;= 2.00. It is elastic;2uestion and Exercise 6-1 (algo);Determine the price elasticity of demand if, in response to an increase;in price of 15 percent, quantity demanded decreases by 10 percent.Instructions: Round your;answer to 2 decimal places..;Is demand elastic or inelasticExplanation;E = Percentage change in quantity/Percentage change in price = 10/15;= 0.67. Demand is Inelastic.;3;uestion and Exercise 6-3;When tolls on the Dulles Airport Greenway were reduced from $1.75 to;$1.00, traffic increased from 10,000 to 26,000 trips a day. Assuming all;changes in quantity were due to the change in price, what is the price;elasticity of demand for the Dulles Airport Greenway?Instructions: Round your;answer to 2 decimal places.;uestion and Exercise 6-3 (algo);When tolls on the Dulles Airport Greenway were reduced from $2.50 to;$1.00, traffic increased from 14,000 to 30,000 trips a day. Assuming all;changes in quantity were due to the change in price, what is the price;elasticity of demand for the Dulles Airport Greenway?Instructions: Round your;answer to 2 decimal places.;Question and Exercise 6-4;One football season Domino?s Pizza, a corporate sponsor of the;Washington Redskins (a football team), offered to reduce the price of its;$8 medium-size pizza by $1 for every touchdown scored by the Redskins;during the previous week. Until that year, the Redskins weren?t scoring many;touchdowns. Much to the surprise of Domino?s, in one week in 1999, the Redskins;scored six touchdowns. (Maybe they like pizza.) Domino?s pizzas were selling;for $2 a pie! The quantity of pizzas demanded soared the following week from 1;pie an hour to 100 pies an hour. What was price elasticity of demand for;Domino?s pizza?Instructions: Round your;answer to 2 decimal places.;Question and Exercise 6-4 (algo);One football season Domino?s Pizza, a corporate sponsor of the;Washington Redskins (a football team), offered to reduce the price of its $8;medium-size pizza by $1 for every touchdown scored by the Redskins during the;previous week. Until that year, the Redskins weren?t scoring many touchdowns.;Much to the surprise of Domino?s, in one week in 1999, the Redskins scored 5;touchdowns. (Maybe they like pizza.) Domino?s pizzas were selling for $3 a pie!;The quantity of pizzas demanded soared the following week from 10 pies an hour;to 70 pies an hour. What was price elasticity of demand for Domino?s pizza?Instructions: Round your;answer to 2 decimal places.;estion and Exercise 6-6Calculate the elasticity of the designated ranges of supply and demand curves on the following graph.Instructions: Round your answers to 2 decimal places.A to B =.C to D =.E to F =.G to H =.: Calculate the;elasticity of the designated ranges of supply and demand curves on the;following graph.;Instructions: Round your;answers to 2 decimal places.;uestion and Exercise 6-9;Kean University Professor Henry Saffer and Bentley University Professor;Dave Dhaval estimated that if the alcohol industry increased the prices of;alcoholic beverages by 100 percent underage drinking would fall by 28 percent;and underage binge drinking would fall by 51 percent. (Binge drinking is;consuming 5 or more drinks at one occasion.)Instructions: Round your;answers to 2 decimal places.;a. The elasticity for underage drinking is.;The elasticity for binge drinking is.;b. What might explain the difference in elasticities?;Question and Exercise 6-10;A newspaper recently lowered its price from 50 cents to 30 cents. As it;did, the number of newspapers sold increased from 240,000 to 280,000.;a. What was the newspaper?s elasticity of demand?Instructions: Round your;answer to 2 decimal places.;b. Given that elasticity, did it make sense for the newspaper to lower its;price?.;c. What would your answer be if much of the firm?s revenue came from;advertising and the higher the circulation, the more it could charge for;advertising?;uestion and Exercise 6-10 (algo);A newspaper recently lowered its price from 60 cents to 55 cents. As it;did, the number of newspapers sold increased from 250,000 to 290,000.;a. What was the newspaper?s elasticity of demand?Instructions: Round your;answer to 2 decimal places.;b. Given that elasticity, did it make sense for the newspaper to lower its;price?;c. What would your answer be if much of the firm?s revenue came from;advertising and the higher the circulation, the more it could charge for;advertising?;=;uestion and Exercise 6-12;University of Richmond Professor Erik Craft analyzed the states? pricing;of vanity plates. He found that in California, where vanity plates cost $28.75;the elasticity of demand was 0.52. In Massachusetts, where vanity plates cost;$50, the elasticity of demand was 3.52.;a. Assuming vanity plates have zero production cost and his estimates are;correct, was each state collecting the maximum revenue it could from vanity;plates? Explain your reasoning.;b. What recommendation would you have for each state to maximize revenue?;c. If these estimates are correct, which state was most likely to be following;a politically unpopular policy?Part d not included in this question.;Question and Exercise 6-14;According to Exhibitor Relations Co., in 2006 average movie ticket;prices were $6.55 and attendance was 1.4 billion, in 2007 ticket prices were;$6.88 and attendance was 1.41 billion.;a. What happened to total revenue from 2006 to 2007?Instructions:Round your answers;to 2 decimal places.;b. If you were to estimate elasticity from these figures, what would your;estimate be?Instructions:Round your answer to 2;decimal places. Enter your answer as a positive number. Do NOT include a;negative sign.;c. What provisos would you offer about your estimate of elasticity?;Question and Exercise 6-15;Which of the following producers would you expect to support a tax on;beer? Which would not? Explain your answer.;a. Producers of hard liquor. Cross-price elasticity with beer:?0.11.;b. Producers of wine. Cross-price elasticity with beer;0.23..;Question and Exercise 6-16;For each of the following goods, state whether it is a normal good, a;luxury, a necessity, or an inferior good. Explain your answers.;a. Vodka.;b. Table salt.;c. Furniture.;d. Perfume.;e. Beer.;f. Sugar.;Question and Exercise 6-18;When the price of ketchup rises by 15 percent, the demand for hot dogs;falls by 1 percent.;a. Calculate the cross-price elasticity of demand.Instructions:Round your answer to 2;decimal places. If you are entering any negative numbers be sure to include a;negative sign (-) in front of those numbers.;b. Are the goods complements or substitutes;c. In the original scenario, what would have to happen to the demand for hot;dogs for us to conclude that hot dogs and ketchup are substitutes?;uestion and Exercise 6-18 (algo);When the price of housing falls by 16 percent, the demand for furniture;rises by 3 percent.;a. Calculate the cross-price elasticity of demand.Instructions:Round your answer to 2;decimal places. If you are entering any negative numbers be sure to include a;negative sign (-) in front of those numbers.;b. Are the goods complements or substitutes;c. In the original scenario, what would have to happen to the demand for;furniture for us to conclude that furniture and housing are substitutes?;uestion and Exercise 6-19;Calculate the income elasticities of demand for the following;a. Income rises by 20 percent, demand rises by 10 percent.Instructions:Round your answer to 2;decimal places. If you are entering any negative numbers be sure to;include a negative sign (-) in front of those numbers.;b. Income rises from $30,000 to $40,000, demand increases (at a constant price);from 16 to 19.Instructions:Round your answer to 2;decimal places. If you are entering any negative numbers be sure to;include a negative sign (-) in front of those numbers.;Question and Exercise 6-19 (algo);Calculate the income elasticities of demand for the following;a. Income rises by 80 percent, demand increases by 70 percent.Instructions:Round your answer to 2;decimal places. If you are entering any negative numbers be sure to;include a negative sign (-) in front of those numbers.;b. Income rises from $20,000 to $30,000, demand increases (at a constant price);from 11 to 14.Instructions:Round your answer to 2;decimal places. If you are entering any negative numbers be sure to;include a negative sign (-) in front of those numbers.;Question and Exercise 6-21;Would a shift in demand have a greater effect on the percentage change;in equilibrium quantity for a straight-line supply curve that intersects the;quantity axis or the price axis?.;Question and Exercise 6-22;For each of the following assume that the supply curve shifts while the;demand curve remains constant. What is the direction of the supply shift and;relative elasticity of demand?;a. Price remains nearly constant. Quantity increases enormously.;b. Price falls enormously. Quantity does not change.;c. Price rises slightly. Quantity remains nearly constant.

Paper#57225 | Written in 18-Jul-2015

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