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Experience:  BSc (Hons) Political Science
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# 1. For each of the following cases, calculate the arc price

### Customer Question

1. For each of the following cases, calculate the arc price elasticity of demand, and state whether demand is elastic, inelastic, or unit elastic. a. When the price of milk increases from \$2.25 to \$2.50 per gallon, the quantity demanded falls from 100 gallons to 90 gallons. b. When the price of paperback books falls from \$7.00 to \$6.50, the quantity demanded rises from 100 to 150. c. When the rent on apartments rises from \$500 TO \$550, the quantity demanded decreases from 1,000 to 950. 2. For each of the following cases, what is the expected impact on the total revenue of the firm? Explain your reasoning. a. Price elasticity of demand is known to be -0.5, and the firm raises price by 10%. b. Price elasticity of demand is known to be -2.5, and the firm lowers price by 5%. c. Price elasticity of demand is known to be -1.0, and the firm raises price by 1%. 3. You have the following information for your product: • The price elasticity of demand is -2.0. • The income elasticity of demand is 1.5. • The cross-price elasticity of demand between your good and a related good is -3.5. What can you determine about consumer demand for your product from this information?
Submitted: 5 years ago.
Category: Homework
Expert:  Joanne replied 5 years ago.

Joanne :

hi

Joanne :

Joanne, Tutor
Category: Homework
Satisfied Customers: 3632
Experience: BSc (Hons) Political Science