Read Eye on Elasticity at the Coffee Shop on p. 123 and then explain why the...
Read Eye on Elasticity at the Coffee Shop on p. 123 and then explain why the demand for latte is inelastic while the demand for a Starbucks latte is elastic. Which demand is likely to be more inelastic: the demand for latte or the demand for coffee?
Homework Answers
The broader (narrower) the definition of a product, the more inelastic (elastic) its demand, since less (more) substitutes are available to buyers.
Since definition of "Latte" is broader than definition of "Starbucks Latte", demand for Latte is more inelastic and demand for Starbucks Latte is more elastic.
Since definition of "Coffee" is broader than definition of "Latte", demand for coffee is more inelastic and demand for Latte is more elastic.
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Read Eye on Elasticity at the Coffee Shop on p. 123 and then explain why the...
Read Eye on Elasticity at the Coffee Shop on and then explain why the demand for...
Read Eye on Elasticity at the Coffee Shop on and then explain why the demand for latte is inelastic while the demand for a Starbucks latte is elastic. Which demand is likely to be more inelastic: the demand for latte or the demand for coffee?
Choose which would have greater price elastic demand and explain why: 1. Black coffee or Starbucks...
Choose which would have greater price elastic demand and explain why: 1. Black coffee or Starbucks coffee?
3. Suppose that there is a bumper crop of coffee across the world, where more coffee...
3. Suppose that there is a bumper crop of coffee across the world, where more coffee than is expected is produced. As a result, Starbucks at LSU lowers the price for a cup of coffee from $2.70 to $2.00. Several days after the price change, the number of cups of coffee sold in a day has increased from 3,000 to 4,125. What is the elasticity of demand at this time scale? Is demand elastic or inelastic? If prices stay the...
For the demand function q =D(P) = 340 - p, find the following. a) The elasticity...
For the demand function q =D(P) = 340 - p, find the following. a) The elasticity b) The elasticity at p = 105, stating whether the demand is elastic, inelastic or has unit elasticity c) The value(s) of p for which total revenue is a maximum (assume that p is in dollars) a) Find the equation for elasticity E(p) = 0 b) Find the elasticity at the given price, stating whether the demand is elastic, inelastic or has unit elasticity....
Explain the relationship between the price elasticity of demand and total revenue. What are the impacts...
Explain the relationship between the price elasticity of demand and total revenue. What are the impacts of various forms of elasticities (elastic, inelastic, unit elastic, etc.) on business decisions and strategies to maximize profit? Explain your responses using empirical examples, formulas, and graphs. Is the price elasticity of demand or supply more elastic over a shorter or a longer period of time? Why? Give examples.
QUESTION TWO [30] Explain why price elasticity of demand matters to business. Use the concept of...
QUESTION TWO [30] Explain why price elasticity of demand matters to business. Use the concept of concept of elastic and inelastic demand as the basis for your answer. Motivate your answer with the aid of appropriate diagrams.
2) Elasticity Return to the demand curve from question (1), that is, P = -0.4QD +...
2) Elasticity Return to the demand curve from question (1), that is, P = -0.4QD + 120 a) What is the elasticity of demand going from P = 100 to P = 35? b) What is the elasticity of demand going from P = 35 to P = 100? c) Explain the discrepancy in the amounts d) What is one alternative measurement method that addresses the discrepancy? Calculate the elasticity using this method. e) Is demand elastic or inelastic? If...
5. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of...
5. Determinants of the price elasticity of demand
Consider some determinants of the price elasticity of
demand:
• The availability of close substitutes
• Whether the good is a necessity or a luxury
• How broadly you define the market
• The time horizon being considered
A good with many close substitutes is likely to have relatively
__(Elastic, Inelastic)___ demand since consumers can easily choose
to purchase one of the close substitutes if the price of the good
rises.
A...
1) In your own words, explain what elasticity of supply is signifying. (Put in your own...
1) In your own words, explain what elasticity of supply is signifying. (Put in your own words – just don’t copy and paste the notes.) 2) Explain why a tax levied on a good with elastic supply will bring in less revenue for the government than one placed on a good with inelastic supply. 3) Briefly explain why both the Elasticity of Demand and the Elasticity of Supply are greater (that is, more elastic) at longer time horizons compared...
Find the elasticity function and determine the values of p for which the demand is elastic,...
Find the elasticity function and determine the values of p for which the demand is elastic, unit, and inelastic for x=f(p)=210-7p.
3. Suppose that there is a bumper crop of coffee across the world, where more coffee than is expected is produced. As a result, Starbucks at LSU lowers the price for a cup of coffee from $2.70 to $2.00. Several days after the price change, the number of cups of coffee sold in a day has increased from 3,000 to 4,125. What is the elasticity of demand at this time scale? Is demand elastic or inelastic? If prices stay the...
For the demand function q =D(P) = 340 - p, find the following. a) The elasticity b) The elasticity at p = 105, stating whether the demand is elastic, inelastic or has unit elasticity c) The value(s) of p for which total revenue is a maximum (assume that p is in dollars) a) Find the equation for elasticity E(p) = 0 b) Find the elasticity at the given price, stating whether the demand is elastic, inelastic or has unit elasticity....
5. Determinants of the price elasticity of demand
Consider some determinants of the price elasticity of
demand:
• The availability of close substitutes
• Whether the good is a necessity or a luxury
• How broadly you define the market
• The time horizon being considered
A good with many close substitutes is likely to have relatively
__(Elastic, Inelastic)___ demand since consumers can easily choose
to purchase one of the close substitutes if the price of the good
rises.
A...
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