Elasticity of demand questions need to be done in graphs, Macroeconomics

To really understand it, compute the following price elasticities of demand:

·         The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded.

·         The price of a pack of cigarettes increases by 10% and there is a 5% drop in the quantity demanded.

·         The price of water increases by 15% but there is no drop in the quantity demanded.

Of the above examples, which is more elastic, and which is the least elastic? Why? Answer the following questions:

·         Why is elasticity an important concept for a business? What if national income went up? How would that affect elasticity?

·         What is the price elasticity of supply? What determines it?

·         Compute the following price elasticities of supply:

o    The price of a hotel room increases by 20%, and the quantity supplied increases by 10%.

o    The price of health care goes up by 50% , and the quantity supplied increases by an equal amount.

o    The price of a book increases by 10%, and the quantity supplied increases 20%.

o    In the above examples, which is more elastic and which is the least elastic? Why?

·         What kind of supply and demand elasticities would the following goods have, and why?

o    Bridge tolls

o    Beachfront properties

o    Gourmet coffee

o    Luxury automobiles

o    Gasoline

o    Cell phones

o    Computers

o    College tuition

Now that you are an expert on elasticities, what do you think would be the best time of year to raise prices, and why? What do you think the elasticities are in the flower business? Use graphs and hypothetical tables to support your answer.

Posted Date: 7/25/2012 11:53:53 PM | Location : United States







Related Discussions:- Elasticity of demand questions need to be done in graphs, Assignment Help, Ask Question on Elasticity of demand questions need to be done in graphs, Get Answer, Expert's Help, Elasticity of demand questions need to be done in graphs Discussions

Write discussion on Elasticity of demand questions need to be done in graphs
Your posts are moderated
Related Questions
discus the various measures that may be taken by a firm to counteract the evil effect of a trade cycle

Inflation in Germany Once we have monthly data on a price index we can calculate inflation. In most nations, the percentage change in price index during one month is small. So,

Why are Economic Models uses for Trade-offs and Trade? Simplified representations of actuality a. production possibility frontier b. comparative advantage c. circular-

discuss the contention that the existance of a labour market in a perfect competion is a fallacy

Suppose the economy is currently in recession, and the exchange rate if fixed using the IS-LM model. a) Explain and illustrate the economy adjustment (in the medium run) b) E

1) Consumption is positively related to stock market wealth but negatively related to taxes and tax rates.

#question.WHAT IS GDP AND DIFFERENT PRICE LEVEL IN SHORT RUN?.

Trade and Economic Growth: For a long time, academic debate on trade liberalization and its positive effects on growth rate remained inconclusive and unsettled. But most recen

Using the PPC show what is meant by the law of increasing opportunity cost and explain (state) why that law exists. Why is that law important when deciding whether or not to watch

Consider a market for fish whose market demand and market supply for fish is specified as Qd = 300 - 2.5 P and Qs = - 20 + 1.5 P respectively. The equilibrium price and quantity is