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- the demand equation for a product is q=1.5p+600, where q is the number of a products that can be sold in a month and p is the price per product. (a) what price will produce the largest revenue? (b) what is the largest monthly revenue?Evaluate the behavior of consumers in terms of the demand for productsYou have the following information for your product:i. The price elasticity of demand is -0.9.ii. The income elasticity of demand is 0.5.iii. The cross-price elasticity of demand between your good and a related goodis 2.0.What can you determine about consumer demand for your product from thisinformation?b) The price elasticity of demand for urban transit fares has been estimated to liebetween -0.1 and -0.6. Based on these results, what is the economic argument for raisingtransit fares? What political arguments might local governments and transit authoritiesencounter in opposition to these economic arguments?
- Suppose a consumer's income elasticities are constant and equal across all goods. (5) (a) What is the income elasticity for each good? Prove this result. (b) Suppose a consumer has a utility function which is a homothetic function. Show that the income elasticities have to be equal.a) Everything else held constant, what will happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up and health officials announced that eating peanut butter was good for your health? Provide brief explanation. b) Everything else held constant, there is a 12 percent increase in the price of peanut butter jar. As a result, quantity demanded drops by 20 percent. Calculate the price elasticity of demand for a jar of peanut butter. ( c) For part (b), explain briefly whether the revenue will increase or decrease?Question 5: (a) Define the Income elasticity of demand? Click or tap here to enter text. (b) What is a normal and an inferior good? Click or tap here to enter text. (c) Define the own-price elasticity of demand. Click or tap here to enter text. (d) Define the cross-price elasticity of demand. Click or tap here to enter text.
- Consider the demand function for bicycles in South Florida: Q = 24 + 3Y – 1.2P where: Q is quantity demanded, Y is monthly income, and P is the price per unit. If/when P = $54, and Y = $2,300, (a) Find the quantity of bicycles that would be sold. (b) Calculate the amount of the seller's total revenue. (c) Compute the price-elasticity of demand (Ep) for bicycles. (d) Interpret your result in (c). (e) Compute the income-elasticity of demand (Ey) for bicycles. (f) Interpret your result in (e).What is the original price of a commodity when price elasticity is 0.71 and demand changes from 20 units to 15 units and the new price is Rs 10? (Point Elasticity) (a) Rs 15.4 (b) Rs.18 (c) Rs.20 (d) Rs.8Suppose = 10,000-2P + 3P -4.5M, where P = $100, P = $50, and M (income) = $2,000. (a) What is the own x x y price elasticity of demand? Please show your calculations. (b) What is the cross price elasticity between good x and good Y? Please show your calculations. (c) What is the income elasticity of demand? Please show your calculations. Hint: For this question please look at the section "Obtaining Elasticities from Demand Functions" in Chapter 3 on pages 89 - 90 of the textbook 2. Suppose Qd=10,000-2 Px +3 Px-4.5M, where Px $100, Px = $50, and M (income) = $2,000. (a) What is the own price elasticity of demand? Please show your calculations. (b) What is the cross price elasticity between good X and good Y? Please show your calculations. (c) What is the income elasticity of demand? Please show your calculations. Hint: For this question please look at the section "Obtaining Elasticities from Demand Functions" in Chapter 3 on pages 89-90 of the textbook
- When describing changes in consumer behavior, explain the difference between substitute and complementary goods? Provide examples of both and describe their impacts on each other when price changes. Does time and a good’s price ($) relative to one’s overall income budget influence elasticity of a product? Why?If the cross-price elasticity of demand between good A and good B is -1.25, then the goods are A substitute goods. B complimentary goods. (c) not related to each other at all.If the supply schedule for tin is relatively inelastic to price changes , a decrease in the demand schedule for tin-will cause a: a) Increase in price and a increase in sales revenue. b)Increase in price and decrease in sales revenue. c)Decrease in price and increase in sales revenue. d) Decrease in price and a decrease in sales revenue.