Part I. Calculation of elasticities A kilo of tortillas has a price of $ 12.00, which presents
Question:
Part I. Calculation of elasticities
A kilo of tortillas has a price of $ 12.00, which presents a market demand of 1,000 kilos in a given market. When the price increases to $ 15.00, the quantity demanded decreases to 950 kilos.
Calculate the price elasticity of demand and interpret the result.
Indicates the type of demand that is presented.
An airline offers single flights at a price of $ 1,000.00; its demand is 300 places. When the price increases to $ 1,450.00, the quantity demanded decreases to 120 places.
Calculate the price elasticity of demand and interpret the result.
Indicates the type of demand that is presented.
Compare the results obtained in the two previous exercises and explain what the difference in elasticities is attributable to.
In the food industry, beef is sold at a price of $ 100.00 per kilo. At that same price, the demand for pork is 500 kilos a day. When the price of beef rises to $ 130.00 a kilo, the demand for pork rises to 700 kilos per day.
Calculate the cross elasticity of demand and interpret the result.
Indicates the type of relationship that both assets have.
In the entertainment industry, when a consumer has an average income of $ 5,500.00, there is a demand for 500 video game units; however, when the income varies to $ 5,000.00, the demand drops to 300 units.
Calculate the income elasticity of demand and interpret the result.
Indicates the type of asset that the video game represents.
In an urban market, a consumer whose average income is $ 2,500.00 demands 800 kilos of tomato. When his income increases to $ 4,000.00, the demand for the good increased to 790 kilos.
Calculate the income elasticity of demand and interpret the result.
Indicates the type of good that the tomato represents.
Compare the results obtained in exercises 3 and 4 and explain what the difference in elasticities should do between both goods (tomato and video games).
A cosmetic company competes in the market with a line of products whose price is $ 50.00 pesos per unit. Its offer is 10,000 units. When the price increases to $ 60.00 per unit, the company offers 12,800 units.
Calculate the price elasticity of supply and interpret the result.
Indicates the type of offer presented in this case.
Explains the variations that occur in the elasticity of the cosmetic line, if the company presents the highest technology in its processes and reduces its staff.
Part II Case study: Price elasticity of demand for soft drinks
Instructions: read carefully the following case about the consumption of soda in Mexico.
In 2013, a study revealed that soft drink is an inelastic good, since its elasticity coefficient is approximately 0.5 percent. If your price increases by 10%, your demand quantity hardly decreases. These data are reduced, despite the increases that may occur in the price of soft drinks, people do not reduce their consumption. According to the Inegi, the sale of soft drinks has shown an increase, a rate of 2 to 3%, during the last four years, a weight of the increase of more than 5% in the prices of this good.
Suppose the elasticity coefficient of the soft drink changes to -0.85. Determine if this good is still considered inelastic. Justifies
They indicated the problems that can change the inelasticity of the soft drink.
The high consumption of soda in Mexico has become a public health problem. It mentions five non-economic effects that would be generated by applying a 10% tax on the consumption of these drinks.
Note: your teacher / advisor can propose some other points, whenever you consider it appropriate. However, it is important to consider, at first, those listed here and that respond to the stated objectives.
Expert Answer:
