Compute the price elasticity of demand

Assignment Help Business Economics

Reference no: EM13215022

A number of towns in the United States have begun charging their residents for garbage pickup based on the number of garbage cans filled per week. The town of Chace decided to increase its per can price from 10 cents to 20 cents per week. In the first week Chase found that the number of cans that were brought to the curb fell from 550 to 525 (although city workers complained that the cans were heavier). A senior seminar economics class ran the numbers, informed their professor that demand for disposal was inelastic, and wrote a letter that recommended that the city raise the price more to maximize town revenue from the program. At the end of the next senior seminar, one year later, the new class discovered that, at a price of 30 cents per can, the number of cans has fallen to 125 and two revenues are down. (A) Compute the price elasticity of demand in the first and second cases. (B) Explain what may have happened, including factors that affect price elasticity of demand.

Reference no: EM13215022

Questions Cloud

Types of sediments found in the world ocean : Identify and describe four types of sediments found in the World Ocean. Describe the source(s) and relative distribution of these sediments throughout the World Ocean basins.

Classify the demand as elastic : The own price elasticity of demand for gasoline is estimated to be 0.6.

Calculate pension expense prior service nd cost amortization : Prepare a pension worksheet for 2014 IN EXCEL. Include in the worksheet the calculation of pension expense, prior service cost amortization, actual/expected/unexpected return, contributions and benefit payments Prepare the journal entry to record ..

Determine the percentage change in price required : Determine the percentage change in price required to increase the quantity demanded of public transportation by 12%.

Compute the price elasticity of demand : one year later, the new class discovered that, at a price of 30 cents per can, the number of cans has fallen to 125 and two revenues are down. (A) Compute the price elasticity of demand in the first and second cases. (B) Explain what may have happ..

Find three products advertised : find three products advertised and sold over the internet with senior citizens discounts what are they, and how big are the discounts? Do the same products feature student discounts? If so, how large are they?

Compute the missing amounts and prepare firms july report : a. Direct material is added at the beginning of the production process, and conversion activity occurs uniformly throughout the process.b. The company uses weighted-average process costing.c. The July 1 work in process was 30 percent complete as to c..

Explain what is the firm''s weighted average cost of capital : Fancee Restaurant's cost of equity is 15.3 percent and its aftertax cost of debt is 6.1 percent. What is the firm's weighted average cost of capital if its debt-equity ratio is 0.58 and the tax rate is 30 percent?

Explain portfolio return and standard deviation : Security A has an expected return of 8%t and a standard deviation of 20%. Security B has an expected return of 10% and a standard deviation of 50%.

User Account

All Pages