What was the newspaper''s elasticity of demand

Assignment Help Econometrics

Reference no: EM131402270

A newspaper recently lowered its price from 50 cents to 30 cents. As it did, the number of newspapers sold increased from 240,000 to 280,000. (LO6-3)

a. What was the newspaper's elasticity of demand?

b. Given that elasticity, did it make sense for the newspaper to lower its price?

c. What would your answer be if much of the firm's revenue came from advertising and the higher the circulation, the more it could charge for advertising?

Reference no: EM131402270

Questions Cloud

Classify given types of data required on college application : Colleges and universities are requiring an increasing amount of information about applicants before making acceptance and financial aid decisions. Classify each of the following types of data required on a college application as quantitative or qu..

After-tax cost of capital for debt financing : Great Seneca Inc. sells $100 million worth of 25-year to maturity 13.76% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $992 for each $1,000 bond. The firm's marginal tax rate is 30%. What is the after-tax cost of capit..

Critically assess a range of essential consultancy skills : Critically assess a range of essential consultancy skills appropriate to a specific consultancy engagement and analyse and evaluate the leadership and team building requirements of a consultancy project.

Determining the profitability index : Good Morning Food, Inc. is using the profitability index (PI) when evaluating projects. You have to find the PI for the company's project, assuming the company's cost of capital is 12.87 percent. The initial outlay for the project is $435,759. The..

What was the newspaper''s elasticity of demand : What would your answer be if much of the firm's revenue came from advertising and the higher the circulation, the more it could charge for advertising?

Translate premise and conclusion of given inference : Translate the premise and conclusion of the following immediate inferences into standard-form categorical propositions.

Calculate cost of common equity financing : Paul Sharp is CFO of Fast Rocket Inc. He tries to determine the cost of equity financing for his company. The stock has a beta of 2.19. Paul estimated that the market return is 9.45%. The current rate for 10-year Treasury Bonds is 3.24%. Calculate..

What might explain the difference in elasticities : What is the elasticity of demand of underage drinking and binge drinking?

Calculate the cost of common equity financing : Last year the Black Water Inc. paid dividends $3.23. Company's dividends are expected to grow at an annual rate of 5% forever. The company's common stock is currently selling on the market for $75.46. The investments banker will charge flotation c..

User Account

All Pages