Explain why the buyers will spend less on cocaine

Reference no: EM13245925

a. If the elasticity of demand for cocaine is -.2 and the Drug Enforcement Administration succeeds in reducing supply substantially, causing the street price of the drug to rise by 50%, buyers will spend less on cocaine.

b. Every year Christmas tree vendors bring tens of thousands of trees from the forests of New England to New York City and Boston. During the last two years, the market has been very competitive; as a result, price has fallen by 10 percent. If the price elasticity of demand was -1.3, vendors would lose revenues altogether as a result of the price decline.

c. If the demand for a good has unitary elasticity, or elasticity is -1, it is always true that an increase in its price will lead to more revenues for sellers taken as a whole.

Reference no: EM13245925

Questions Cloud

Explain what causes movements along the curve and shifts : You have been asked to discuss the differences between the microeconomic definitions of supply and demand and the macroeconomic differences of aggregate supply and demand. Discuss what determines supply and demand and aggregate supply and aggregate d..

What can infer about elasticity of demand for taxicab : Taxicab fares in most cities are regulated. Several years ago taxicab drivers in Boston obtained permission to raise their feres 10 percent, and they anticipated that revenues would increase by about 10 percent

Imagine that you are an international reporters you have : Imagine that you are an international reporters. You have been tasked with describing and critiquing the current state of the U.S. economy.

Suppose people freely choose to spend 40 percent of their : Suppose people freely choose to spend 40 percent of their income on health care, but the government decides to tax 40 percent of a person's income to provide the same level of coverage as before. What can be said about deadweight loss in each case?

Explain why the buyers will spend less on cocaine : If the elasticity of demand for cocaine is -.2 and the Drug Enforcement Administration succeeds in reducing supply substantially, causing the street price of the drug to rise by 50%, buyers will spend less on cocaine.

What is the belief that laws are justified if they prevent : What is the belief that laws are justified if they prevent a person from harming him- or herself known as?

What is the electric potential at point a : two charges, q1 and q2 are present on a normal coordinate system ,point A is located at the orgin, q1 has a charge of 1.11 nC, what is the electric potential at point A

Give major source of capital in most countries is domestic : For a developing country to grow, it needs capital. The major source of capital in most countries is domestic saving, but the goal of stimulating domestic saving usually is in conflict with government policies aimed at reducing inequality

Calculate the angular speed of the door : A bullet of mass 10g and speed 500 m/s is fiered into a door and gets embeded exactly at the centre of the door, Calculate the angular speed of the door just after the bullet embeds into it

User Account

All Pages