Briefly summarize recent trends in demand on both your company and the overall industry. ( Coca-Cola would analyze the impact of trends in demand on both Coca-Cola and the soft drink market.) Who are the company’s main competitors? Be sure to evaluate the non-price determinants of demand in this section. Which factors have an impact on consumer responsiveness to changes in the price of your company’s goods and/or services? Would you consider the company’s goods and/or services to be price elastic or price inelastic? Why?

Briefly summarize recent trends in demand on both your company and the overall industry. ( Coca-Cola would analyze the impact of trends in demand on both Coca-Cola and the soft drink market.) Who are the company’s main competitors? Be sure to evaluate the non-price determinants of demand in this section. Which factors have an impact on consumer responsiveness to changes in the price of your company’s goods and/or services? Would you consider the company’s goods and/or services to be price elastic or price inelastic? Why?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.3P: (Categories of Price Elasticity of Demand) For each of the following absolute values of price...

See similar textbooks

Supply, Demand, and Elasticity

Briefly summarize recent trends in demand on both your company and the overall industry. ( Coca-Cola would analyze the impact of trends in demand on both Coca-Cola and the soft drink market.)

Who are the company’s main competitors? Be sure to evaluate the non-price determinants of demand in this section.
Which factors have an impact on consumer responsiveness to changes in the price of your company’s goods and/or services? Would you consider the company’s goods and/or services to be price elastic or price inelastic? Why?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Quantity demanded and demand:

VIEW

Step 2: Non-price determinants and competition:

VIEW

Step 3: Elasticity:

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

(Categories of Price Elasticity of Demand) For each of the following absolute values of price elasticity of demand, indicate whether demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. In addition, determine what would happen to total revenue if a firm raised its price in each elasticity range identified. Absolut Value Elasticity Effect of Price Increase a b c d
In an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price and an 11 percent increase in advertising. If the price elasticity of demand is 1.5 and the advertising elasticity of demand is +0.6, would you expect an increase or decrease in total revenues?
MIcro: The company “Mike Broonie” operates in the market of monopolistic competition. Just now, the company weekly produces and sells 100 units of pillows for £12 each. The average total cost to produce the pillows doesn’t depend on the output, being £10 per unit. Having evaluated the price elasticity of demand for its product, the company concluded that demand is inelastic at the moment. a. What indicator characterizes the price elasticity of demand? What formula (or formulas) one can use to calculate this indicator? Choose any number for this indicator that, under the conditions specified in the case, could characterize the price elasticity of demand for the company “Mike Broonie”. b. Imagine that the owner of the company wants to increase the price of the company’s product. How will it affect sales, revenue, and profit (will each of these indicators increase, decrease, or remain the same)? Give here theoretically substantiated forecast. To increase the number of points…
Read the following statement and answer the question that follows."The term product life cycle refers to the length of time a product is introduced toconsumers into the market until it is removed from the shelves. The life cycle of aproduct is broken into four stages: introduction, growth, maturity, and decline."Describe how price elasticity of demand varies across the stages of the “product life cycle” andexplain the implications regarding the pricing decision in each stage. Support your answerwith real-life examples.
1) You run a small company that provides regular pool service to customers in East Dallas. Like your competitors in the pool service business, you provide pool service 4 times per month but invoice customers for service on a monthly basis. When you raised the monthly price of pool service from $125 to $140, you lost 28 customers, leaving you with 90 pools to service. You believe that your demand curve has constant elasticity and has not shifted since you started your business. a. Estimate your elasticity of demand? b. Given the cost of pool chemicals, gas, wear and tear on your truck and your time, you believe that the marginal cost of servicing an additional pool in East Dallas is $75 per month. What can you say about your optimal price? Was it a good idea to increase your price? Over time, you realize that half of your 90 customers appear to be more price sensitive than the other half. You know that your customers communicate with each other and would be unhappy knowing that they are…
Q 2. i) How can we differentiate Elastic and Inelastic Price Elasticity of Demand? ii) Calculate Total Revenue (TR), Marginal Revenue (MR) and Average Revenue (AR) for the following set of data. Quantity Price Total Marginal Revenue Revenue 80 1 76 2 72 3 68 4 64 5 60 6 56 7 52 8 48 44 If price increases what will be the effect on Total Revenue (TR) in case of a) Elastic, b) Inelastic & c) Unitary Elastic Price Elasticity of Demand?
24. The seafood restaurant you manage has daily specials. You have observed that the fresh salmon is overstocked and you want to increase salmon sales by 30%. You know the price elasticity of demand for salmon is -1.2. How much (and in what direction) should you change salmon prices to increase sales by 30%? Will this increase or decrease total salmon revenue? How do you know? You also know that fresh salmon and fresh tuna have a cross price elasticity of +.5. With the percentage decrease in salmon prices calculated above, how much more/less fresh tuna will you sell? Are salmon and tuna complements or substitutes at your restaurant?
1. The demand curve for a product is given by Q = 1,200-3P -0.1P, Where P = SR300. a. What is the own price elasticity of demand when P = SR140? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price below SR140? b. What is the own price elasticity of demand when P = SR240? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above SR240?
When a walk-in clinic spent $5,000 a year on newspaper advertising, it saw 5,000 patients a year. When it increased its annual advertising expenditure to $7,500 per year, it saw 10,000 patients a yeara. What is the change in advertising expenditures?b.What is the change in patient visits?c. What is the advertising elasticity of demand?d. Do you think the increase in advertising expenditures was worthwhile and why?
5 In a discussion with your friend, LeeAnna, you mentioned you have studied Price Elasticity of Demand (PED) as well as the various costs that impact production. LeeAnna, who happens to own a Pizza store is worried about the declining profitability of her store. She needs your advice on what she should do to increase her profit. Provide good economic advice to LeeAnna, using the concepts you have learned from your chapters 1 - 6 (especially paying close attention to PED and production costs). In your advice, put into consideration the nature of her competition, what variables impact the profit of an organization, and which of these variable(s) can the business owner control to increase profit? How can the PED of a product, in this case, pizza, impact how much price the owner of the store can change?
How can price elasticity of demand be important to: -(i) a government, (ii) managers of hypermarkets ‘
2. At the price of $15, Zeke were able to sell 7,000 ball pens. When he increased the price by $10, he sold only 5,000 pens. What is the demand elasticity? If his marginal cost is $3 per pen, what is his desired markup and what is his initial actual markup? Was raising the price profitable?