By what percentage would a rise in the price reduce quantity

Reference no: EM13204230

Suppose that 50 units of a good are demanded at a price of $1 per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?

Reference no: EM13204230

Questions Cloud

Cash flow estimation and risk analysis : What problem would arise if in projecting cash flows for a capital budgeting decision on a project interest expense was not excluded and Why are incremental cash flows the relevant cash flows for capital budgeting analysis? Why not just analyze th..

How many balls baseball manufacturer is currently producing : A baseball manufacturer is currently producing 10,000 baseballs. At this level of production, MC is estimated at $2.50 and average cost at $2.00. Baseballs sell for $3.00 at this production level, and marginal revenue is $2.25.

Explain distance between the ships changing : At noon, ship A is 30 nautical miles due west of ship B. Ship A is sailing west at 22 knots and ship B is sailing north at 23 knots. How fast (in knots) is the distance between the ships changing at 5 PM?

Basics of capital budgeting : In a capital budgeting context, explain how a positive NPV is evidence of an "abnormal" rate of return on a project and For the most part the market for financial securities is efficient while the market for capital budgeting ideas is not.

By what percentage would a rise in the price reduce quantity : Suppose that 50 units of a good are demanded at a price of $1 per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Show that these data yield a price elasticity of 0.25. By what percentage would a 10 per..

State what is the largest open interval of convergence : What is the largest open interval of convergence (don't worry about endpoints) for the power series about c = 0 which represents

Weighted marginal cost of capital : Why is the firms weighted average cost of capital considered a hurdle rate and explain how the use of book value weights taken from the balance sheet might render the calculation of a firm's WACC unreliable.

Depict an equation relating to and then graph equation : Let represent her total salary this month (in dollars), and let represent the number of copies of Math is Fun she sells. Write an equation relating to , and then graph your equation using the axes below.

Define relationship between quality rating and experience : The general Manager of an engineering firm wants to know whether a technical artist's experience influences the quality of his or her work. A random sample of 24 artists is selected and their years of work experience and quality rating(as assessed..

User Account

All Pages