Question: Consider a good whose original price equals $100, and the firm sells 1,000 pounds of the good at this price. The good's price elasticity of

Consider a good whose original price equals $100, and the firm sells 1,000 pounds of the good at this price. The good's price elasticity of demand equals -2. Because the firm is selling a product measured in pounds, it can sell partial units.

a. Use the equation to calculate the effect of a one-percent increase in price on the number of units sold? Explain. d%Q%P

b. What is the effect of a one-percent increase in price on total revenue generated by the sale of this good? Explain.

c. Use the equation to calculate the effect of a one-percent decrease in price on the pounds sold? Explain. d%Q%P

d. What is the effect of a one-percent decrease in price on total revenue generated by the sale of this good? Explain.

e. Based on answers (a) through (d) explain why revenue falls when the price of a price-elastic good increases. f. Based on answers (a) through (d) explain why revenue rises when the price of a price-elastic good falls.

I need the formulas written out so I can understand how to work these. Thank you!!

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

please help me in 70 dollars to do this assignment iin APA style referencing Topic 1 & 2 Introduction to financial management and the Australian Taxation system Financial Markets 2 Learning...

Unit 6 Elasticity Worksheet Name _________________________________ Price elasticity of demand is a measure of how responsive demand is to a change in price. If a price change leads to a considerably...

1. Calculate the cost of each capital component, after-tax cost of debt, cost of preferred, and cost of equity with the DCF method and CAPM method. 2. What do you estimate the company?s WACC? Please...

We are working on elasticity of demand. Consider a good whose price elasticity of demand equals -0.5. a. What is the effect of a 10 percent increase in price on this good's quantity demanded? Is...

i need help 36.It can be concluded from this graph that....... A. Both products A and B are price elastic. B. Both products A and B are price Inelastic, C. Product A Is more elastic than product B....

Price elasticity of demand is a measure of how responsive demand is to a change in price. If a price change leads to a considerably bigger change in quantity demanded, we would consider demand for...

1.How do you find out how many products a firm should produce if it sells its products in a perfectly competitive market structure and the market price is $50? You are given the following...

3. The optimal markup rule is (P markup (above marginal cost and expressed as a percentage of price) varies inversely with the price elasticity of demand for the good or service. (Remember that the...

4 Files 12:47 PM Mon May 16 Insert Draw Layout Review View Unit 3Microec0nomics Name: ELASTICITY Use the space below to take notes during class. Elastic: Unit Elastic: Inelastic: Perfect...

KIC, Inc., plans to issue $5 million of bonds with a coupon rate of 8 percent and 30 years to maturity. The current market interest rates on these bonds are 7 percent. In one year, the interest rate...

According to RBC theory, what is the source of the business cycle? What is the role of fluctuations in the rate of technological change?

Why did Quaker Oats Company's acquisition of Snapple fall? Multiple Choice intercompany competitiveness unstable market conditions managerial hubris stockholder revolt

For the unity feedback system of Figure P8.3, where find the values of and K that will yield a second-order closed-loop pair of poles at -1 j100. K(s + a) G(s) s(s +3)(s + 6)

Early in 20X3, Inter-Provincial Banking Corporation (IPBC), a Canadian public company, acquired 100% of the shares of an inactive shell corporation, Safe Investments Inc. (SIC) for a nominal amount....

Using the PartialSolution interface and solve method from Exercise E13.22, provide a class MazePartialSolution for solving the maze escape problem of Exercise P13.7. Data from Exercise E13.22, The...

A small turbine delivers 1.5 MW and is supplied with steam at 700C, 2 MPa. The exhaust passes through a heat exchanger where the pressure is 10 kPa and exits as saturated liquid. The turbine is...

Reaction of the tertiary amine tropinone with (bromomethyl)benzene (benzyl bromide) gives not one but two quaternary ammonium salts, A and B. Compounds A and B are stereoisomers that are...

Discuss the advantages of outsourcing and how globalization has made outsourcing more attractive than ever before.

4. Give an example of how the consistency principle can be used to influence others.

6. Give an example of how the liking principle can be used to influence others.

5. Give an example of how the consensus principle can be used to influence others.