CH. 6
You own a hot dog stand that you set up outside the student union every day at lunch time. Currently,you are selling hot dogs for a price of $3, and you sell 30 hot dogs a day (point A on the diagram to the right). You are considering cutting the price to $2. The graph to the right shows two possible increases in the quantity sold as a result of your price cut. Use the information in the graph (new quantities are given on the horizontal axis) to calculate the price elasticity LOADING... between these two prices on each of the demand curves. Use the midpoint formula to calculate the price elasticities. On the demand curve containing the points "A" and "B", the price elasticity of demand for a price cut from $3 to $2 is On the demand curve containing the points "A" and "C", the price elasticity of demand for a price cut from $3 to $2 is
$-1.55 $-0.08
If a 23 percent increase in the price of Cheerios causes a 19 percent reduction in the number of boxes of cereal demanded, the price elasticity of demand for Cheerios is The demand for Cheerios is If a 23 percent increase in the price of Cheerios causes a 29 percent reduction in the number of boxes of cereal demanded, the price elasticity of demand for Cheerios is The demand for Cheerios is If a 23 percent increase in the price of Cheerios causes a 15 percent reduction in the number of boxes of cereal demanded, the price elasticity of demand for Cheerios is The demand for Cheerios is
-0.83% inelastic -1.26% elastic -0.65% inelastic
A study of the consumption of beverages in Mexico found that: "Overall, for soft drinks a 10% price increase decreases the quantity consumed by 10.6%." Is demand price elastic or price inelastic? Briefly explain.
-1.06% Elastic, because the percentage change in quantity demanded is greater than the percentage change in price. This is the correct answer.
What is the midpoint method for calculating price elasticity of demand? The midpoint method for calculating price elasticity of demand is: How else can you calculate the price elasticity of demand? What is the advantage of the midpoint method?
the change in quantity divided by the average of the initial and final quantities divided by the change in price divided by the average of the initial and final prices. Both A and B. The midpoint formula will give the same value whether moving from the higher price to the lower price or from the lower price to the higher price.
What is the formula for the price elasticity of demand? The formula for the price elasticity of demand is Why isn't elasticity just measured by the slope of the demand curve?
the percentage change in quantity demanded divided by the percentage change in price. The slope can change dramatically, depending on the units chosen for quantity and price.
a. Calculate the change in the quantity of rye demanded divided by the change in the price of rye. Measure the quantity of rye demanded in bushels. The change in the quantity of rye demanded divided by the change in the price of rye in bushels is b. Calculate the change in the quantity of rye demanded divided by the change in the price of rye, but this time measure the quantity of rye demanded in millions of bushels. The change in the quantity of rye demanded divided by the change in the price of rye in millions of bushels is Compared to part a, the answer to part b is ----- in absolute terms c. Finally, assuming that the demand curve for rye did not shift between 2017 and 2018, use the information in the table to calculate the price elasticity of demand for rye. Using the midpoint formula, the price elasticity of demand for rye is
-2,000,000 -2.00 smaller -0.71
Jacob Goldstein, a correspondent for National Public Radio, discussed the effect that a tax on sugared soft drinks would have on consumers: "How much would a tax drive down consumption? Economists call this issue "price elasticity of demand"long dashhow much demand goes down as price increases..."
Disagree, because price elasticity of demand refers to percentage changes in price and quantity demanded.
Draw a graph of a perfectly inelastic demand curve. Use the line drawing tool to graph a perfectly inelastic demand curve. Properly label this line. The drug insulin is one example of a product that would have a perfectly inelastic demand curve. Draw a graph of a perfectly elastic demand curve. Use the line drawing tool to graph a perfectly elastic demand curve. Properly label this line. The drug insulin is one example of a product that would have a perfectly elastic demand curve
Graph True Graph False