Calculate the cross-price elasticity-interpret the result

Assignment Help Business Economics

Reference no: EM13887124

This analysis assessment has three parts. While responding to each part, make sure that you show the formula prior to your complete calculation. Listing only the final answer will not earn credit. Part I. Using the midpoint method, calculate and interpret the price elasticity of demand for the following situation: When the price of oranges increases from $1.00 per pound to $1.50 per pound, quantity demanded falls from 500 pounds to 400 pounds. Calculate the price elasticity of demand. Is the demand for oranges price elastic, inelastic, or unit elastic? Explain. Calculate total revenue before and after the price change. How does that relate to the elasticity interpretation? Part II. Given the following information, calculate the income elasticity of demand using the midpoint formula. Nancy's income increases from $20,000 to $30,000 and her consumption of spaghetti changes from 10 pounds per month to 2 pounds per month. Calculate the income elasticity of demand. Interpret the result. Part III. Given the following information, calculate the cross-price elasticity of demand. The quantity of Pepsi purchased rises by 15% when the price of Coca-Cola rises by 30%. Calculate the cross-price elasticity. Interpret the result. Submission Requirements:

Reference no: EM13887124

Questions Cloud

Dominant companies providing chargers : ABC Inc. and XYZ Co. are the two dominant companies providing chargers, adapters, and other accessories for cell phones.

When excess demand exists for tickets to sporting event : When excess demand exists for tickets to a major sporting event or concert, profit opportunities exist for scalpers. Explain using supply and demand curves to illustrate this economic principle. Do you agree or disagree that these scalpers are effici..

Traditionally protected by a quota system : Imagine that a foreign country’s movie industry has been traditionally protected by a quota system. With this system, movie theaters have to show domestically-made movies on at least a certain percentage of screens. It is designed to keep out a flood..

Fill in the blank with the terms high low or zero duration : In each of the following financial situations, fill in the blank with the terms high duration, low duration, or zero duration, as appropriate. a. If you were considering buying a bond and you expected interest rates to increase, you would prefer a bo..

Calculate the cross-price elasticity-interpret the result : This analysis assessment has three parts. While responding to each part, make sure that you show the formula prior to your complete calculation. Listing only the final answer will not earn credit. Given the following information, calculate the cross-..

Type of worker approximate a perfectly competitive market : How closely does the labor market for the following type of worker approximate a perfectly competitive market? What, if any, are the major imperfections in each market? a. migrant farm worker b. steel worker c. nurse d. bank executive

If policy change increases social welfare : For each of the following, identify whether the statement is true, false or uncertain and justify your answer. If everyone has the same marginal rate of substitution, then the allocation is Pareto efficient. b) If a policy change increases social wel..

Calculate the pv of the cash flows and then duration : Guess the duration of the following investment. Is it less than two years, two to three years, three to four years, or greater than four years? After your guess, use a discount rate of 6 percent and calculate the PV of the cash flows and then duratio..

Compute the following measures of forecast accuracy : 1.Refer to the time series data in Exercise 1. Using the average of all the historical data as a forecast for the next period, compute the following measures of forecast accuracy:

User Account

All Pages