Question: Suppose you were shown a demand curve for bananas and
Suppose you were shown a demand curve for bananas and were asked to calculate price elasticity of demand. Applying the appropriate equation, you came up with 0.80. Your friend was asked to derive price elasticity of demand on the identical demand curve and came up with 0.50. Worried, you asked your professor which of the two answers was correct. The professor checked through both calculations and said both were! How can that be?
Answer to relevant QuestionsSuppose Mark Sanchez, quarterback of the New York Jets, increased his annual income 20 percent by endorsing Kellogg's Com Flakes. If his demand for hair shampoo didn't change, what can we say about his income elasticity of ...Suppose, at a party for economics majors, you win a choice among three mystery boxes. You don't know what each contains, but you know that each box has a pair of gifts. You know that one box has a CD and a pair of ...Calculate the income elasticities (at each income level) for boxes of Girl Scout cookies. Stephanie Howard likes mystery novels. Her MU/P ratio for those novels is 60/S10. If the price of the novels falls from $10 to $5, the number of novels Stephanie demands increases. Explain. When the rains ended, most of the season's crops were destroyed. A government economic adviser suggests imposing a price ceiling on food. Her husband thinks a price floor is better. Who's right? Why?
Post your question