None Raising the average price of an entree at a restaurant from $9 to $10 reduces the number of customers per day from 250 to 225.A. What is the elasticity of demand to two decimal places for entrees at a price of $9?iB. Would raising the price from $9 to $10 increase or decrease the profit?

The objective of the question is to calculate the elasticity of demand for entrees at a price of $9…

Answered: Raising the average price of an entree…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 1P

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The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
The quantity supplied of a good rises from 120 to 140 as price rises from 4 to 5.50. What is the price elasticity of supply of the good?
Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price for wheat and a price 2 higher per bushel. Do you think that farmers collectively would try to reduce the supply of wheat and drive the price up 2 higher per bushel? Explain your answer. Assuming that they would try to reduce supply, what problems might they have in actually doing so?
If the elasticity of demand for hamburgers equals 21.5 and the quantity demanded equals 40,000, predict what will happen to the quantity demanded of hamburgers when the price increases by 10 percent. If the price falls by 5 percent, what will happen?

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Raising the average price of an entree at a restaurant from $9 to $10 reduces the number of customers per day from 250 to 225. A. What is the elasticity of demand to two decimal places for entrees at a price of $9? i B. Would raising the price from $9 to $10 increase or decrease the profit?