The income elasticity of demand for hardback books

Assignment Help Business Economics
Reference no: EM131007187

Suppose that the income elasticity of demand for hardback books is 2.5, that household incomes are rising at 2% a year., and that 2 million are initially being sold per year. The own price elasticity of demand is -0.5 and the cross-price elasticity of demand with paperbacks is 5.0.

a. If the supply elasticity of hardbacks is infinite, what are the expected sales of hardback books in a year?

b. If the supply elasticity of hardbacks is zero, what are the expected sales of hardback books in a year?

c. In the situation described in (b), by how much are expenditures on hardbacks changing each year?

d. Suppose paperback prices are rising 2% a year. In the situation in (a), what are the expected sales of hardbacks in one year?

Explanations to each part would be greatly appreciated.

Reference no: EM131007187

Questions Cloud

Prepare a schedule of cost of goods manufactured : Harmon Company uses the weighted average method in its process costing system. The Curing Department of Harmon Company reported the following information for the month of November.
What general costs-fixed and variable : Some restaurants are open only for breakfast and lunch but are closed for dinner. What economic factor's determine if it is better to close the restaurant for dinner or leave it open for all three meals times. What general costs (Fixed and/ or variab..
Create a run chart for the baseballs : Baseballs used in the major leagues in the United States must adhere to strict stan- dards. One such standard is that the circumference must be between 9 and 9.25 inches.
Consider the traditional farm problem : Consider the traditional farm problem: Food can be viewed as a necessity, and overall has a price-inelastic demand. Suppose that 10% of each farmer's crop were destroyed. What is the effect on farmer income? If the price elasticity of demand is -0.5,..
The income elasticity of demand for hardback books : Suppose that the income elasticity of demand for hardback books is 2.5, that household incomes are rising at 2% a year., and that 2 million are initially being sold per year. The own price elasticity of demand is -0.5 and the cross-price elasticity o..
What are the seven basic steps in reviewing computer based : What are the seven basic steps in reviewing computer-based systems?
Compute the unit product cost : The company applies manufacturing overhead on the basis of machine hours. The predetermined overhead rate is $18 per machine hour. Compute the unit product cost that would appear on the job cost sheet for this job.
Determine effect on aggregate output-consumption-employment : Suppose that there is a natural disaster that destroys part of the nations capital stock. Determine the effect on aggregate output, consumption, employment, and the real wage, with reference to income and substitution effects, and explain your result..
Develop the essential analytical and problem solving skills : Develop the essential analytical and problem solving skills required of lawyers and, more immediately, that will be important for your law exams.

Reviews

Write a Review

Business Economics Questions & Answers

  Compute the yield to maturity

Compute the yield to maturity to the nearest percentage point.

  What is the firms net operating income after taxes

In 2008, a firm has receipts of $12 million and expenses (excluding depreciation) of $5 million. Its depreciation for 2008 amounts to $3 million. If the effective income tax rate is 35%, what is the firm’s net operating income after taxes (NOPAT)?

  What will profits be at profit max output and price

Total profit is maximized at output of ? What is profit maximizing price? What will profits be at profit max output and price?

  Reduce poverty in brazil

Could trade help reduce poverty in Brazil and other developing countries. How do product and factor prices and wages eventually equalize between the two countries.

  Compute the numerical elasticity of long-run demand

Compute the numerical elasticity of long-run demand. Is it unitary, elastic, inelastic, etc. Explain why would consumers demand 0 minutes in the long run if the price was $.30 per minute.

  Assume that the low-calorie frozen microwavable food

assume that the low-calorie frozen microwavable food company from assignments 1 and 2 wants to expand and has to make

  When two people enter into a contract

When two people enter into a contract they both expect something very specific from the other, right? Does this make calculating damages, in a case of breach of contract, easy, Why or why not?

  Given the current state of energy use

Given the current state of energy use, which continues to grow exponentially in such countries as China and India, what measures can the United States and other Western countries take to produce more fuel-efficient and environmentally friendly fuels?

  Vending machines are a popular form of non-store retailing

Vending machines are a popular form of non-store retailing. Why? What types of products have been successfully introduced in such machines in the past ten years or so? And why? Which ones have failed and why?

  Repablicans and democrats usually agree on most issues

Why might two presidential candidates appear to have very similar opinions during an election year even if they come from different parties? Repablicans and Democrats usually agree on most issues

  The probability of accepting the next wage offer

The probability of accepting the next wage offer is: Which of the following would be considered a real (as opposed to pecuniary) externality associated with migration? The longer the expected length of tenure on the job:

  What price would the monopolist charge in each market

A monopolist is selling the same product in two different markets, the West Coast and the East Coast. The demand for the product is larger in the West Coast: Demand in the East Coast: P =10 - Q Demand in the West Coast: P = 20 - Q. What price would t..

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