Question 1

Suppose demand is given by the equation: Q^D= 50 - 5P At what price will total revenue be maximized?

Accepted Answer

The answer of Suppose demand is given by the equation:
Q<sup>D...

Question 2

Scenario 5-4
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Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-6. Considering the cross price elasticity of demand for mobile and landline telephone service, is the cross price elasticity of demand positive or negative and do the consumers of Plainville regard these goods as substitutes or complements?

Accepted Answer

The answer of Scenario 5-4
​
Consider the markets for mobile and...

Question 3

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says "I'll take 10 lottery tickets," and Barb says "I'll take $10 worth of lottery tickets." What is each person's price elasticity of demand for lottery tickets?

Accepted Answer

The answer of Adam and Barb go to the store...

Question 4

Suppose the price elasticity of demand for a product is 1. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Question 5

Scenario 5-3
​
Suppose the demand function for good X is given by:
 $$Q _ { d x } = 15 - 0.5 P _ { x } - 0.8 P _ { y }$$ where
 $$Q _ { d x }$$ is the quantity demanded of good X,
 $$P _ { x }$$ is the price of good X, and
 $$P _ { y }$$ is the price of good Y, which is related to good X.
-Refer to Scenario 5-2. Using the midpoint method, if the price of good Y is $10 and the price of good X decreases from $5 to $3, what is the price elasticity of demand for good X? Is the demand elastic, unitary elastic, or inelastic?

Accepted Answer

The answer of Scenario 5-3
​
Suppose the demand function for good...

Question 6

What is the price elasticity of demand at any point on a perfectly elastic demand curve?

Accepted Answer

The answer of What is the price elasticity of demand...

Question 7

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

Accepted Answer

The answer of If the cross-price elasticity of demand between...

Question 8

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Question 9

Scenario 5-4
​
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-6. Considering the income elasticity, what type of good is mobile telephone service?

Accepted Answer

The answer of Scenario 5-4
​
Consider the markets for mobile and...

Question 10

Suppose demand is given by the equation: Q^D= 80/P At what point along this demand curve will total revenue be maximized?

Accepted Answer

The answer of Suppose demand is given by the equation:
Q<sup>D...

Question 11

Suppose a market has the demand function Q^d=20-0.5P. At what price will total revenue be maximized?

Accepted Answer

The answer of Suppose a market has the demand function...

Question 12

Scenario 5-3
​
Suppose the demand function for good X is given by:
 $$Q _ { d x } = 15 - 0.5 P _ { x } - 0.8 P _ { y }$$ where
 $$Q _ { d x }$$ is the quantity demanded of good X,
 $$P _ { x }$$ is the price of good X, and
 $$P _ { y }$$ is the price of good Y, which is related to good X.
-Refer to Scenario 5-2. Using the midpoint method, if the price of good X is $10 and the price of good Y increases from $8 to $10, the cross price elasticity of demand is about

Accepted Answer

The answer of Scenario 5-3
​
Suppose the demand function for good...

Question 13

If the cross-price elasticity of demand between two goods is positive, what is the relationship between the two goods?

Accepted Answer

The answer of If the cross-price elasticity of demand between...

Question 14

Scenario 5-3
​
Suppose the demand function for good X is given by:
 $$Q _ { d x } = 15 - 0.5 P _ { x } - 0.8 P _ { y }$$ where
 $$Q _ { d x }$$ is the quantity demanded of good X,
 $$P _ { x }$$ is the price of good X, and
 $$P _ { y }$$ is the price of good Y, which is related to good X.
-Refer to Scenario 5-2. Good X and Good Y are related as

Accepted Answer

The answer of Scenario 5-3
​
Suppose the demand function for good...

Question 15

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

Accepted Answer

The answer of If the income elasticity of demand for...

Question 16

If the income elasticity of demand for a good is -1.40, is the good a normal or inferior good?

Accepted Answer

The answer of If the income elasticity of demand for...

Question 17

What is the price elasticity of demand at any point on a perfectly inelastic demand curve?

Accepted Answer

The answer of What is the price elasticity of demand...

Question 18

Suppose the price elasticity of demand for a product is 1.3. If a supplier wants to increase revenue, what change should it make to price, if any?

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Question 19

Suppose you manage a baseball stadium. To pay the salary for a star player, you would like to increase the total revenue from ticket sales. Should you increase or decrease the price of a ticket to increase revenue? Explain.

Accepted Answer

The answer of Suppose you manage a baseball stadium. To...

Question 20

Scenario 5-4
​
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-6. Using the midpoint method, what is the income elasticity of demand for mobile service?

Accepted Answer

The answer of Scenario 5-4
​
Consider the markets for mobile and...

Quiz 5: Elasticity and Its Application

Suppose demand is given by the equation: QD = 50 - 5P At what price will total revenue be maximized?

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says "I'll take 10 lottery tickets," and Barb says "I'll take $10 worth of lottery tickets." What is each person's price elasticity of demand for lottery tickets?

Suppose the price elasticity of demand for a product is 1. If a supplier wants to increase revenue, what change should it make to price, if any?

What is the price elasticity of demand at any point on a perfectly elastic demand curve?

If the cross-price elasticity of demand between two goods is negative, what is the relationship between the two goods?

Suppose the price elasticity of demand for a product is 0.5. If a supplier wants to increase revenue, what change should it make to price, if any?

Suppose demand is given by the equation: QD = 80/P At what point along this demand curve will total revenue be maximized?

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

If the cross-price elasticity of demand between two goods is positive, what is the relationship between the two goods?

If the income elasticity of demand for a good is 0.56, is the good a normal or inferior good?

If the income elasticity of demand for a good is -1.40, is the good a normal or inferior good?

What is the price elasticity of demand at any point on a perfectly inelastic demand curve?

Suppose the price elasticity of demand for a product is 1.3. If a supplier wants to increase revenue, what change should it make to price, if any?

Suppose you manage a baseball stadium. To pay the salary for a star player, you would like to increase the total revenue from ticket sales. Should you increase or decrease the price of a ticket to increase revenue? Explain.

Suppose demand is given by the equation: Q^D= 50 - 5P At what price will total revenue be maximized?

Suppose demand is given by the equation: Q^D= 80/P At what point along this demand curve will total revenue be maximized?

Suppose a market has the demand function Q^d=20-0.5P. At what price will total revenue be maximized?