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6-5: An end-of-aisle price promotion changes the price elasticity of a good from -2 to-3. If...
An end-of-aisle price promotion changes the price elasticity of a good from −2 to −3. Suppose...
An end-of-aisle price promotion changes the price elasticity of a good from −2 to −3. Suppose the normal price is $40, which equates marginal revenue with marginal cost at the initial elasticity of –2. What should the promotional price be when the elasticity changes to –3? (Hint: In other words, what price will equate marginal revenue and marginal cost?) A. $39.00 B. $30.00 C. $42.00 D. $27.00
6-3: To conduct an experiment, AMC increased movie ticket prices from 9.00 to 10.00 and measured...
6-3: To conduct an experiment, AMC increased movie ticket prices from 9.00 to 10.00 and measured the change in ticket sales. Using the data over the following month, they concluded that the increase wsa profitable. However, over the subsequent months, they changed their minds and discontinued the experiment. 1.How did the tming affect their conclusion about the profitablitiy of increasing prices? 2. What would happen to the elasticity of the demand in the long run? 6-5: An end-of-aisle price promotion...
1. The price elasticity of demand measures, a. how responsive suppliers are to price changes. b....
1. The price elasticity of demand measures, a. how responsive suppliers are to price changes. b. how responsive sales are to changes in the price of a related good. c. how responsive the quantity demanded is to a change in price. d. how responsive sales are to a change in buyers' incomes. 2. Suppose the value of the price elasticity of demand is -3. This implies that, a. a 1 percent increase in the price of the good causes the...
2) (4pts.) The own price elasticity of a good sold by a firm, when the price...
2) (4pts.) The own price elasticity of a good sold by a firm, when the price of the good is 4 TL/unit, is -2. The firm would like to increase its sales by 2%. Should the firm increase or decrease the price of the good and (approximately) by how much? 3) (4pts.) A 5% increase in the income of an individual resulted with a 1% increase in the quantity of bread that a consumer demanded. Based on this information find...
Suppose the own price elasticity of demand for good X is -2, its income elasticity is...
Suppose the own price elasticity of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -6. Determine how much the consumption of this good will change if for the following: A) The price of good X decreases by 5 percent. B) The price of good Y increases by 10 percent. C) Advertising decreases by 2 percent. D) Income increases by 3...
Exercise 4.1: Price Elasticity of Demand The price of a good is $200, and the quantity...
Exercise 4.1: Price Elasticity of Demand The price of a good is $200, and the quantity demanded is 2,000. The price elasticity of demand is-1.25. If the price changes to $204, what is the new quantity demanded? Exercise 4.2: Income Elasticity of Demand A consumer's income is $40,000, and the quantity demanded of a good is 2,000. The income elasticity of demand is +0.60. If the consumer's income changes to $41,000, what is the new quantity demanded? Exercise 4.3: Income...
Price Elasticity of Demand: Naturally Good Organics Price Elasticity of Demand measurers how changed in a...
Price Elasticity of Demand: Naturally Good Organics Price Elasticity of Demand measurers how changed in a price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price. In order to understand how to plan a successful pricing program, marketers must understand how elastic or inelastic the consumers are to changes in price. In other words, to what extent will a price increase or decrease result...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4. Determine how much the consumption of this good will change if: 9.16 points Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 5 percent. 15 percent b. The price of good...
Short Problem. 12 points: 26. (a) Write out the complete formula for the Price Elasticity of...
Short Problem. 12 points: 26. (a) Write out the complete formula for the Price Elasticity of Demand. Now, given the following information on changes in the price and quantity of a good, calculate the PED using the midpoint method, for both possible price increases, (b) that is, show how you calculate PED once as price increases from P=1 to P-3, and again (c) as price increases from P-3 to P-5. For each price increase, is the good elastic, inelastie, or...
13. If the quantity of a good sold varies greatly from small changes in the price, we say that good is: A) highly i...
13. If the quantity of a good sold varies greatly from small changes in the price, we say that good is: A) highly inelastic. B) unitary elastic. C) not elastic. D) highly elastic. 14. A product's price changes from $2 to $6 and its quantity demanded changes from 10 to 4 units. This is an example of price: A) inelastic demand. B) elastic demand. C) unitarily elastic demand. D) inelastic supply. 13. Which of the following is a possible measurement...
6-3: To conduct an experiment, AMC increased movie ticket prices from 9.00 to 10.00 and measured the change in ticket sales. Using the data over the following month, they concluded that the increase wsa profitable. However, over the subsequent months, they changed their minds and discontinued the experiment. 1.How did the tming affect their conclusion about the profitablitiy of increasing prices? 2. What would happen to the elasticity of the demand in the long run? 6-5: An end-of-aisle price promotion...
1. The price elasticity of demand measures, a. how responsive suppliers are to price changes. b. how responsive sales are to changes in the price of a related good. c. how responsive the quantity demanded is to a change in price. d. how responsive sales are to a change in buyers' incomes. 2. Suppose the value of the price elasticity of demand is -3. This implies that, a. a 1 percent increase in the price of the good causes the...
2) (4pts.) The own price elasticity of a good sold by a firm, when the price of the good is 4 TL/unit, is -2. The firm would like to increase its sales by 2%. Should the firm increase or decrease the price of the good and (approximately) by how much? 3) (4pts.) A 5% increase in the income of an individual resulted with a 1% increase in the quantity of bread that a consumer demanded. Based on this information find...
Exercise 4.1: Price Elasticity of Demand The price of a good is $200, and the quantity demanded is 2,000. The price elasticity of demand is-1.25. If the price changes to $204, what is the new quantity demanded? Exercise 4.2: Income Elasticity of Demand A consumer's income is $40,000, and the quantity demanded of a good is 2,000. The income elasticity of demand is +0.60. If the consumer's income changes to $41,000, what is the new quantity demanded? Exercise 4.3: Income...
Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Y is -4. Determine how much the consumption of this good will change if: 9.16 points Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 5 percent. 15 percent b. The price of good...
Short Problem. 12 points: 26. (a) Write out the complete formula for the Price Elasticity of Demand. Now, given the following information on changes in the price and quantity of a good, calculate the PED using the midpoint method, for both possible price increases, (b) that is, show how you calculate PED once as price increases from P=1 to P-3, and again (c) as price increases from P-3 to P-5. For each price increase, is the good elastic, inelastie, or...
13. If the quantity of a good sold varies greatly from small changes in the price, we say that good is: A) highly inelastic. B) unitary elastic. C) not elastic. D) highly elastic. 14. A product's price changes from $2 to $6 and its quantity demanded changes from 10 to 4 units. This is an example of price: A) inelastic demand. B) elastic demand. C) unitarily elastic demand. D) inelastic supply. 13. Which of the following is a possible measurement...
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