Measuring Price Elasticity
What is the formula for measuring price elasticity of demand? Percentage change in quantity demanded / Percentage change in price When the price elasticity coefficient is less than 1, the percentage change in quantity demanded is smaller than the change in price. When the price elasticity coefficient is equal to 1, the percentage change in quantity demanded is equal to the change in price. When the price elasticity coefficient is greater than 1, the percentage change in quantity demanded is greater than the change in price.
If a university passed a rule stating that university students must live in university dormitories, what effect would this have on the price elasticity of demand for dorm space? What effect would this …show more content…
Price rises and supply is elastic. Total revenue increases d. Price rises and supply is inelastic. Total revenue increases e. Price rises and demand is inelastic. Total revenue increases f. Price falls and demand is elastic. Total revenue increases g. Price falls and demand is unit-elastic. Total revenue remains unchanged
You are chairperson of a state tax commission responsible for establishing a program to raise new revenue through excise taxes. The elasticity of demand would be important to you in determining the products on which the taxes should be levied. Elasticity of demand would be important because when a tax is levied on a product whose demand is highly inelastic , tax revenue would be high
Because of a legal settlement over state health care claims, in 1999 the U.S. tobacco companies had to raise the average price of a pack of cigarettes from $1.95 to $2.45. The decline in cigarette sales was estimated at 8 percent. What does this imply for the elasticity of demand for cigarettes? The price elasticity of demand for cigarettes was inelastic because the price changed by 22.7 percent.
The values indicate that a 1 percent increase in income will increase the quantity of movies demanded by 3.4 …show more content…
In the 1990s, a solution to this problem was to give stock options to the managers .
The solution backfired on some firms when the manager sold the stocks at artificially increased share prices
The explicit costs of going to college include tuition costs and the cost of books, whereas the implicit costs include foregone income
Accounting profit equals sales revenue minus explicit costs.
A normal profit is considered a cost becauseit is the amount required to ensure continued supply of the product.
Marginal product first rises, then declines, and ultimately becomes negative because the returns to the variable input get incrementally smaller since there is a fixed input.
The law of diminishing returns influences short-run costs because MC is found by dividing the wage rate by MP.
Fixed costs and variable costs are distinct in the short run because there are some costs that do not vary with the total output of a given plant size
Advertising expenditures: variable cost
Fuel: variable cost
Interest on company-issued bonds: fixed cost
Shipping charges: variable
If a university passed a rule stating that university students must live in university dormitories, what effect would this have on the price elasticity of demand for dorm space? What effect would this …show more content…
Price rises and supply is elastic. Total revenue increases d. Price rises and supply is inelastic. Total revenue increases e. Price rises and demand is inelastic. Total revenue increases f. Price falls and demand is elastic. Total revenue increases g. Price falls and demand is unit-elastic. Total revenue remains unchanged
You are chairperson of a state tax commission responsible for establishing a program to raise new revenue through excise taxes. The elasticity of demand would be important to you in determining the products on which the taxes should be levied. Elasticity of demand would be important because when a tax is levied on a product whose demand is highly inelastic , tax revenue would be high
Because of a legal settlement over state health care claims, in 1999 the U.S. tobacco companies had to raise the average price of a pack of cigarettes from $1.95 to $2.45. The decline in cigarette sales was estimated at 8 percent. What does this imply for the elasticity of demand for cigarettes? The price elasticity of demand for cigarettes was inelastic because the price changed by 22.7 percent.
The values indicate that a 1 percent increase in income will increase the quantity of movies demanded by 3.4 …show more content…
In the 1990s, a solution to this problem was to give stock options to the managers .
The solution backfired on some firms when the manager sold the stocks at artificially increased share prices
The explicit costs of going to college include tuition costs and the cost of books, whereas the implicit costs include foregone income
Accounting profit equals sales revenue minus explicit costs.
A normal profit is considered a cost becauseit is the amount required to ensure continued supply of the product.
Marginal product first rises, then declines, and ultimately becomes negative because the returns to the variable input get incrementally smaller since there is a fixed input.
The law of diminishing returns influences short-run costs because MC is found by dividing the wage rate by MP.
Fixed costs and variable costs are distinct in the short run because there are some costs that do not vary with the total output of a given plant size
Advertising expenditures: variable cost
Fuel: variable cost
Interest on company-issued bonds: fixed cost
Shipping charges: variable