Calculate the price elasticity of demand is equal

Assignment Help Business Economics
Reference no: EM13833154

A firm has just increased its price by 35 percent over last year’s price, and it found that quantity sold decreased by 45 percent.

a. The firm comes to you and wants to know its price elasticity of demand.

Instructions: Round your answer to 2 decimal places.

You calculate the price elasticity of demand is equal to ______.

b. What additional information would you search for before you did your calculation?

a) I would check to see if consumer tastes or expectations had changed.

b) I would check to see if income had changed.

c) I would check to see if the prices of complements and substitutes had changed.

d) I would check to see if taxes or subsidies had changed.

e) I would check all of the above to make sure that all other things remained constant

Reference no: EM13833154

Questions Cloud

Effective annual return on investment : An investment currently costs $30,000 if the current inflation rate is 3% and the effective annual return on investment is 8%. Approximately how long will it take the future value to reach $45,000?
Research on motivation and culture : Research on motivation and culture
Steps for the upgrading of legacy systems outlined : Refer to real world solution in the chapter. Has crescent healthcare applied the three steps for the upgrading of legacy systems outlined in the chapter? Which of those have been done in more or less detail? Can you fill in the blanks for any that yo..
Increase in the legal minimum wage : Who is hurt and who is helped by an increase in the legal minimum wage? Under what circumstances might a higher minimum not reduce employment?
Calculate the price elasticity of demand is equal : A firm has just increased its price by 35 percent over last year’s price, and it found that quantity sold decreased by 45 percent. The firm comes to you and wants to know its price elasticity of demand. What additional information would you search fo..
Describe several uncontrollable factors that impact a&f : How could A&F enhance the total retail experience at each of its store brands? Describe several uncontrollable factors that impact A&F
Quality and quantity of rental housing supplied : Suppose it is decided that rent control in New York City will be abolished and that market rents will now prevail. Assume that all rental units are identical and so are offered at the same rent.  Use a diagram to show the effect on the rental market ..
Describe the top ten communication skills : Describe the top ten communication skills that business leaders seek citing any references used other than the textbook.. Of those, list two of which you feel you have a strong grasp and two that you feel you need to improve.
Included in investment rather than in consumption : Why is the purchasing of new housing included in the investment component of GDP rather than the consumption component? Also any reason why household purchases of new cars should be included in investment rather than in consumption?

Reviews

Write a Review

Business Economics Questions & Answers

  Explain how will the level of the velocity of money change

Explain how will the level of the velocity of money change if there is a permanent (one time) increase in the nominal interest rate, holding other factors constant.

  Unemployment components of the natural rate

If workers do not have the skills that are required in the job market, which of the following will occur? When the economy is below full employment, it is producing. How has the unemployment components of the natural rate of unemployment changed over..

  Q1 cutting the price of a product never increases the

q1. cutting the price of a product never increases the amount of revenue you receive. if we want to increase revenue we

  Compute the price elasticity of demand for access to bridge

In 2008 tolls were raised on Bridge X. Consequently, bridge traffic decreased 40 percent and revenues rose 170 percent. Compute the price elasticity of the demand for access to Bridge X

  Firm can sell its product for more than its fixed costs

If a firm can sell its product for more than its fixed costs, but not for more than its totals costs:

  Illustrate what is the probability which at least

Illustrate what is the probability which at least one of the 5000 funds outperforms the market in 5 consecutive years, 10 consecutive years and 20 consecutive years.

  How government projects programs continue to give benefits

All astute comments thus far. Some government projects also programs continue to give benefits for many yrs.

  Using the regression results and the other computations

using the regression results and the other computations from assignment 1 determine the market structure in which the

  Growing economy means that the economy is producing

A growing economy means that the economy is producing more also more stuff, either since it has more resources.

  Assume that the inflation free rate

Assume that you borrow $15,000 for five years (annual payments) at a market rate of 5%. Assuming that inflation is 3.5%, what would the equivalent equal annual payment be in constant dollars? What is the Actual dollar amount of a $15,000 constant dol..

  What is the value of marginal product of labour

Suppose the employees of Starbucks in China are paid 8 yuan per hour and a cup of coffee is priced at 8 yuan. If Starbucks is maximising its profit, a what is the value of marginal product of labour (VMPL) per hour of the last worker employed by Star..

  Knowledge needed to build or distribute the product

Markets can give a buyer everything a buyer needs to know about a product even though the buyer does not have the training to understand the specific knowledge needed to build or distribute the product.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd