Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 4, Problem 16APA
(a)
To determine
Which elasticity of demand is mentioned.
(b)
To determine
Price elasticity of demand.
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3. You are the only pharmacist in a small town; the next closest drugstore is 50 miles away. The
population in your town consists of young farmers and older retired families. You have noticed
that the young farmers are less sensitive to price changes than the retired population.
Specifically, you have found that the working population has an own price elasticity of demand
of -2 and the retired farmers have an own price elasticity of-4. How can you use this
information to your advantage?
Please see the information below. I need assistance with this problem.
The table shows information on the conditions of demand for ordinary gummy bears and their sugar-free version.
Price ($ per kg)
Sugar-free Gummy Bears Demanded (thousands of kg)
Regular Gummy Bears Demanded (thousands of kg)
$2.20
183.00
487.00
$2.60
177.00
381.00
$3
159
275.00
$3.40
139.00
157.00
As the price of gummy bears rises from $2.60 to $3, what are the price elasticities of demand of sugar-free gummy bears and of ordinary gummy bears? Use the midpoint method and specify answers to one decimal place.
Elasticity of demand of sugar-free gummy bears:___________
Elasticity of demand of regular gummy bears:______________
10.
Consider the following table based on the article "The effect of prices on nutrition: Comparing the
impact of product- and nutrient-specific taxes" by Matthew Harding and Michael Lovenheim in the Journal of
Health Economics (53: 53-71).
Good
Strawberries
Watermelons
Carrots
a.
Price Elasticity of
Demand
- 1.128
-0.830
- 1.379
C.
Which of the above are normal goods? How do you know?
b. If average income decreases by 5 percent, calculate the change in demand for strawberries:
The demand for (circle the correct answer):
Strawberries is
Watermelons is
Income
Elasticities
1.625
1.134
0.943
Carrots is
d. Strawberries and (circle the correct answer:
Watermelons are
Cross Price Elasticity with
Strawberries
1
Carrots are
-0.058
0.025
Elastic / Inelastic
Elastic / Inelastic
Elastic / Inelastic
Substitutes/complements
Substitutes/ complements
Chapter 4 Solutions
Macroeconomics
Ch. 4.1 - Prob. 1RQCh. 4.1 - Prob. 2RQCh. 4.1 - What makes the demand for some goods elastic and...Ch. 4.1 - Prob. 4RQCh. 4.1 - Prob. 5RQCh. 4.2 - Prob. 1RQCh. 4.2 - Prob. 2RQCh. 4.2 - What does the cross elasticity of demand measure?Ch. 4.2 - Prob. 4RQCh. 4.3 - Prob. 1RQ
Ch. 4.3 - Prob. 2RQCh. 4.3 - Prob. 3RQCh. 4.3 - Provide examples of goods or services whose...Ch. 4.3 - Prob. 5RQCh. 4 - Rain spoils the strawberry crop, the price rises...Ch. 4 - Prob. 2SPACh. 4 - Prob. 3SPACh. 4 - Prob. 4SPACh. 4 - Prob. 5SPACh. 4 - Prob. 6SPACh. 4 - Prob. 7SPACh. 4 - Prob. 8SPACh. 4 - The table sets out the supply schedule of jeans....Ch. 4 - Prob. 10APACh. 4 - The figure shows the demand for DVD rentals. a....Ch. 4 - Prob. 12APACh. 4 - Prob. 13APACh. 4 - Prob. 14APACh. 4 - Prob. 15APACh. 4 - Prob. 16APACh. 4 - Prob. 17APACh. 4 - Prob. 18APACh. 4 - When Alexs income was 3,000, he bought 4 bagels...Ch. 4 - Prob. 20APACh. 4 - Prob. 21APACh. 4 - Prob. 22APACh. 4 - The table sets out the supply schedule of...Ch. 4 - Prob. 24APACh. 4 - Prob. 25APACh. 4 - Prob. 26APACh. 4 - Prob. 27APA
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