Calculate the price elasticity of demand for each group

Reference no: EM13689572

The makers of academic books find that, when they raise the price of the average hard copy book from $50 to $75, quantity demanded among students drops from 100 to 90. Among casual readers, quantity demanded drops from 80 to 40.

a. Calculate the price elasticity of demand for each group.

b. Is demand price elastic or price inelastic for each group?

c. Using the determinants of demand, explain why there is a difference in elasticity for each group.

d. Do you think the price elasticity of demand for students would change if the number of students using e texts increased? Why?

Reference no: EM13689572

Questions Cloud

Aid to the establishment of personnel requirements : As an aid to the establishment of personnel requirements, the director of a hospital wishes to estimate the mean number of people who are admitted to the emergency room during a 24-hour period.

Interested in studying the incomes of consumers : An economist is interested in studying the incomes of consumers in a particular country. The population standard deviation is known to be $1,000. A random sample of 50 individuals resulted in a mean income of $15,000.

Calculate the price elasticity of demand for each group : The makers of academic books find that, when they raise the price of the average hard copy book from $50 to $75, quantity demanded among students drops from 100 to 90. Among casual readers, quantity demanded drops from 80 to 40.

Find the variance of the portfolio : Consider an investment portfolio of $50,000 in stock A and $50,000 in stock B. The expected value of A is 9.5% and B is 6%. The variance of A is 13% and the variance of B is 8%.

Opportunity cost of attending college is greater for bill : Bill and Sam both attend the same college and have the same expenses for tuition, books, and supplies. However, Bill is a famous athlete who could be earning $1 million per year playing professional baseball if he were not attending college while Sam..

Determine the firms cost function and its marginal cost : Suppose a firms production function is: q = L 0.5+K0.5. Assume that the price of labor is w = 1 and the price of capital is r = 1. Determine the firms cost function and its marginal cost.

How much does aggregate expenditure increase : Normal 0 false false false EN-US X-NONE X-NONE If income increases by $10,..

User Account

All Pages