ACTIVITY 2.19A problem to 'stretch' youAssume there is a rise of about 10% in the prices of the following goods. Statewhether there is likely to be large, small or no change in the quantity demandedThen state whether you think demand is price elastic or inelastic, and why.ProductElectricityLuxury holidayBreadA Toyota carA newspaperSmall or large changein quantity demandedACTIVITY 2.20Using the formulaBelow is the demand schedule for tins of beans.Price of beans per tin (cents)40301Calculate the PED. (Hint: Use 40 cents as your original price.)2 Comment on its value.3What will the demand curve for beans look like? Draw a simplediagram to show this.Price elastic or Why?price inelasticACTIVITY 2.21What happens to total revenue?Below are two demand schedules, one for bread and one for passenger flightsbetween two US cities.Price per airline ticket*$500$400Price per loaf*25 cents.20 centsbMarket demand per week1,0001,500bQuantity demanded per month10,00010,500original price and quantity.1 In each case calculate the PED. Comment on their values.2 Calculate the total revenue (price x quantity demanded) for bread and forairline tickets at each price.Quantity demanded per month1,0001,8003a Would you advise bread-makers to cut the price of a loaf from 15to 20 cents? Explain your answer.Would you advise the airline to cut the air fare from $500 to $4007Explain your answer.4 Using the information above, decide which of the words in italics below doesnot apply in each case.aDemand is price elastic when the percentage change in quantity demandedis more/less than the percentage change in price. A fall in price will causea large/small extension in quantity demanded so that total sales revenuefalls/rises. If price is increased, total revenue would fall/rise.Demand is price inelastic when quantity demanded changes by agreater/smaller percentage than price. A fall in price will cause a small/large extension in quantity demanded so that total sales revenue fails/rises. A rise in price therefore causes total revenue to fall/rise.

PRODUCT CHANGE IN QUANTITY DEMANDED NATURE OF GOOD REASON Electricity quantity will fall by less…

Assume there is a rise of about 10% in the prices of the following goods. State whether there is likely to be large, small or no change in the quantity demanded Then state whether you think demand is price elastic or inelastic, and why Product Electricity Luxury holiday Bread A Toyota car A newspaper Small or large change in quantity demanded Price elastic or Why? price inclastic

Assume there is a rise of about 10% in the prices of the following goods. State whether there is likely to be large, small or no change in the quantity demanded Then state whether you think demand is price elastic or inelastic, and why Product Electricity Luxury holiday Bread A Toyota car A newspaper Small or large change in quantity demanded Price elastic or Why? price inclastic

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 6PA: The price of coffee rose sharply last month, while the quantity sold remained the same. Five people...

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