Homework

Homework Questions? Ask a Tutor for Answers ASAP

Ask an Expert,
Get an Answer ASAP!

Homework
This answer was rated:

1. Explain the difference between a change in quantity demanded

and a change in demand. 2...
1. Explain the difference between a change in quantity demanded and a change in demand.

2. Use the model of supply and demand to explain why ticket scalpers exist.

3. For each of the following goods, indicate whether you expect demand to be inelastic or elastic, and explain your reasoning.

opera                           

foreign travel      

local telephone service

video rentals              

eggs                            



4. Suppose the price elasticity of demand for a campus film series is 1.40. If the objective of the film society is to maximize its total revenue (price times the number of tickets sold), should it increase or decrease price? Why ?
Show More
Show Less
Ask Your Own Homework Question
Answered in 3 hours by:
4/26/2009
Zoheb
Zoheb, Tutor
Category: Homework
Satisfied Customers: 2
Experience: I currently teach students from middle school to mba students in different math.
Verified

1. A change in the quantity demand is a shift of the point on the demand curve. A change in the demand is a shift of the entire demand curve to the left or the right. When the price of a good changes it causes consumers to change their behavior and thus effects only the quantity demand. For example, if a good becomes more expensive and prices go higher, than the quantity demand for that good is lower.

graphic

 

Here is an example, when DVD prices went from 5 to 15, the point shift on the x axis from 74 to 30.

 

A change in the demand (shift of the entire curve) is not effected by price. It is affected by the following factors.

 

1. Change in Income. (If people have more income than the entire curve shifts right because they can afford to demand more, and same holds true if income goes down)

2. Changes in tastes and preferences (if a good comes into fashion and people just like it more.. like the iphone, than the whole curve shifts, and is demanded more.. if the consumer tastes decrease and have less of an appetite for the good, than the entire curve will shift down and to the left)

3. The availability and cost of credit (if it is cheaper to get a loan.. less interest. than consumers will have more income.. which is back to 1, and it will shift the curve to the right, and vice versa)

4. Changes in the price of related goods (there is 2 rules for this

a. if a good is a substitute.. let's say hot dogs and hamburgers. Let's assume the demand curve we are talking about is hamburgers. If the price of hot dogs goes up, less people will demand hot dogs, will substitute for hamburgers, and thus this will shift our demand curve up. If the price of hot dogs goes down, people will substitute away from hamburgers, and buy more hot dogs, because it is cheaper, and this will shift our demand curve for hamburgers down and to the left.

b. Complements-A good that is a complement is one that you use with the primary good. For example fries with hamburgers and we are still assuming hamburgers is our primary good. If the price of fries goes down, more people will buy fries, and thus will also buy more hamburgers because that complements fries, and that will shift the demand curve up and to the right. . If the price of fries goes up, than less people will buy fries, and thus hamburger demand will go down, and shift it to the left.

5. Population size and composition. The bigger the population and demographics size for people who demand your product, the more demand that will be created, and thus shift the curve to the right.

6. And finally expectations. If I feel as a consumer that the price of a good will go down in the future, I'm going to wait, and that will cause the demand curve to shift down and to the left. If I feel the price of a good will be more expensive in the future, I will buy it now, and the demand curve will shift up and to the right. An example of this is cars and gasoline. If I feel the price of a prius is cheap right now, because gas is cheap, and when gas goes up in the future, so will the price of the Prius, I will buy it now, and it will cause the demand curve to shift up.

 

2. Number 2, I will need to create a more thorough example. If you liked how I explained #1 and #3, I will also do #2.

 

3. Elasticity is the percentage change in one variable as a response to a change in another variable. In this example, price elasticity of demand, is the percentage change in quantity demand as a response to a percentage change in price. Basically how responsive quantity demand is to changes in price.

So for example, if price goes up by one percent, how much does quantity demand go down. If it goes down by more than 1 percent than it is very responsive (or very elastic), if the quantity demand goes down by less than 1 percent than people still buy the product and not very responsive to price (inelastic). An example of this would be gasoline. Even though the price of gasoline goes up, the demand for it doesn't drop as much as the price increase. If the price of the product or good goes up by 1 percent, and the quantity demand drops equal to 1 percent than it is unitary elastic.

Remember that the relationship between price and quantity demand is negatively correlated. If one goes up, the other goes down and if one goes down, the other goes up. Price elasticity of demand works the same way.

 

So what effects elasticity?

graphic

So using these factors, let's look at the elasticity.

 

Opera- There are lots of substitutes to opera, like Broadway plays, and other classical interests. Opera can be pricey, so it is a higher percentage of income. It is also not a necessity, thus opera is elastic.

 

Foreign Travel- Foreign travel has substitutes, like domestic travel, and other forms of leisure. It can be very expensive, and is definitely not e necessity, thus it is elastic as well.

 

Local Telephone Service- There aren't many substitutes to local telephone service, maybe email, or using your cellphone, or voice over IP, but its still not the same as talking to someone on the phone. Having the ability to communicate locally is a need and the percentage of income that it takes to pay for local phone service is not that much. So this would inelastic.

 

Video Rentals- There are plenty of substitutes to video rentals such as watching it on TV, pay per view, going to a movie theater instead, etc. It is definitely not a need. Video rentals aren't that expensive, so its not a big percentage of my income so that would make it inelastic. However, given that 2 of the determinates make it elastic, video rentals would be elastic. If the price increases by 1 percent, I would see a drop in quantity demand by more than 1 percent, because you go elsewhere and its just not needed.

 

Eggs- There aren't that many true substitutes to eggs, except for maybe meat that gives you proteins. There is a need for eggs, its part of our pyramid diet, and has been in our culture for hundreds of years like bread. And eggs aren't that expensive compared to how much income an average person makes, so this would be inelastic.

 

4. If the price elasticity is 1.4 what that means is that for every one percent the price goes up, the quantity demand goes down 1.4 for the movie. The formula for revenue is p*q (price per good multiplied by quantity of the good) So basically the way to maximize this equation is to make sure that the percent increase in one of these variables is greater than the other. If we increase price that won't happen because if goes up 1 percent, q will go down by 1.4 which is greater and thus revenue is lower. However if we decrease the price for the film series by 1 percent the quantity demand (q) will go up 1.4

which is greater and thus revenue is higher. So the campus should decrease the price, and thus they will attract more than enough people to offset the lower price, and make higher revenue.

 

 

 

 

 

Ask Your Own Homework Question
Customer reply replied 8 years ago

Excellent work...if you could complete number two in the same manner...we will be good to go.

 

Customer/p>

graphic

 

 

graphic

 

graphic

 

graphic

Basically the example I used above is from a hockey example. The reason they exist is because the primary market has distortions and doesn't reach its equilibrium point, for specific reasons. It could be that new information came about at the event, after the tickets were sold (for example Wayne Gretzky announced he retired, and these tickets have already been sold, and thus new information changes the demand side because since this is Wayne's last game, the demand curve increases because tastes and preferences have increased). It could also be artificially created because somebody buys all the tickets, and now has a monopoly where he can sell it at a different price. However, this person also takes the risk that he may not be able to sell it a higher price, for the investment he put in, of time and money. Thus, the secondary market is created with scalpers who are able to charge a different price, or resale price, because the equilibrium point wasn't reached in the primary market, due to lack of information or the supply and demand curves have shifted after the primary market was settled because of new information and thus a new equilibrium is needed (a great example of this, in the stock market.. after the firm initially comes out with a stock price, the company gets their money from selling shares ,and the primary market is settled.. however, as the life of the company progress, you get new information, and the environment changes, and thus the supply and demand for the shares of the company changes, creating a secondary market, where people buy and sell the company stock, because there has been a shift of the supply and demand curves.

 

Hope this helps.

 

 

 

Ask Your Own Homework Question

oh by the way, the above examples and images were cited from the essential of economics book I had in college by Paul Krugman.

 

Thank you!

Zoheb
Zoheb, Tutor
Category: Homework
Satisfied Customers: 2
Experience: I currently teach students from middle school to mba students in different math.
Verified
Zoheb and 87 other Homework Specialists are ready to help you
Ask your own question now
Customer reply replied 8 years ago
Thanks for your help with this. I did not read your background...are you a eco major?

Yes I am. I studied quantitative economics at the University of California, San Diego.

 

It has one of the top ten economic departments in the country.

Ask Your Own Homework Question
Customer reply replied 8 years ago
Great. I will be needing you over the next 9 weeks. Thanks...be on the lookout for me.
This answer is protected
Would you like to ask this question?
If you've already paid for this answer, simply Login.
Customer reply replied 8 years ago

I have already accepted and paid this. Could you please post it as accepted and paid.

 

thanks

Ask Zoheb Your Own Question
Zoheb
Zoheb
Zoheb, Tutor
Category: Homework
Satisfied Customers: 2
2 Satisfied Customers
Experience: I currently teach students from middle school to mba students in different math.

Zoheb is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

I couldn't be more satisfied! This is the site I will always come to when I need a second opinion.

JustinKernersville, NC

Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around.

EstherWoodstock, NY

Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know.

RobinElkton, Maryland

He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here.

DianeDallas, TX

< Previous | Next >

Meet the Experts:

LogicPro

LogicPro

Engineer

5,731 satisfied customers

Expert in Java C++ C C# VB Javascript Design SQL HTML

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

4,551 satisfied customers

More than 5000 online tutoring sessions.

Linda_us

Linda_us

Finance, Accounts & Homework Tutor

3,138 satisfied customers

Post Graduate Diploma in Management (MBA)

Chris M.

Chris M.

M.S.W. Social Work

2,636 satisfied customers

Master's Degree, strong math and writing skills, experience in one-on-one tutoring (college English)

F. Naz

F. Naz

Chartered Accountant

2,161 satisfied customers

Experience with chartered accountancy

Bizhelp

Bizhelp

CPA

1,887 satisfied customers

Bachelors Degree and CPA with Accounting work experience

Seanna

Seanna

Tutor

1,781 satisfied customers

3,000+ satisfied customers, all topics, A+ work

< Previous | Next >

Related Homework Questions
For LogicPro only: Design a C++ program in which a class
For LogicPro only: Design a C++ program in which a class should manage the free and allocated space. You should use a dynamic node implementation of link list to implement both lists for this assignme… read more
LogicPro
LogicPro
Engineer
Bachelor of Technology
5,731 satisfied customers
You can apply several different worksheets themes from which
You can apply several different worksheets themes from which tab? A.Insert, B. Home, C.File, or D. Page layout! Its not B What would be a situations in which you could use an excel chart to present yo… read more
GLENN
GLENN
Master of Mathematics
343 satisfied customers
Just wanted to see if you would be interested in helping me
Hello Again! Just wanted to see if you would be interested in helping me with two more programs? I will attach the Program outlines and the Word documents. Please let me know if you would like to help… read more
George Sibiya
George Sibiya
PhD
217 satisfied customers
6. How many worksheets display in the Excel window when you
6. How many worksheets display in the Excel window when you create a new blank workbook? A. 3 B. 2 C. 4 D. 1 Student Answer: A Answer: Incorrect Reference: Objective 2.17. What would be a situation in… read more
AnswersByEric
AnswersByEric
Software Developer
Associate Degree
37 satisfied customers
Question 18 of 20: Select the best answer for the question.
Question 18 of 20 : Select the best answer for the question. 18. What size paper should you use for a legal document? A. 3″ × 5″ B. 8½″ × 11″ C. 7¼″ × 10½″ D. 8½″ × 14″… read more
JA Engineer
JA Engineer
Broadcast Engineer
Diploma (Honors)
163 satisfied customers
I need help with Exam Number: 00701400 Lesson Name: General
I need help with Exam Number: 00701400Lesson Name: General Math I, Study Unit 2 Pennfoster test… read more
GLENN
GLENN
Master of Mathematics
343 satisfied customers
Answer all three questions and don't exceed 600 words for
Answer all three questions and don't exceed 600 words for each answer while using at least two references to support your answers for each question adopting APA citation in the text and in the referen… read more
F. Naz
F. Naz
Chartered Accountant
CA Finalist & Completed B.com
2,161 satisfied customers
QUESTION 1 A(n) _________________ policy are codified as
QUESTION 1A(n) _________________ policy are codified as standards and procedures that are used when configuring or maintaining systems.0.10000 points Save AnswerQUESTION 2In systems analysis and desig… read more
F. Naz
F. Naz
Chartered Accountant
CA Finalist & Completed B.com
2,161 satisfied customers
I need all the questions answered inthis pdf! I need all
I need all the questions answered inthis pdf! I need all sixty questions on all 21 pages answered!… read more
Steven, M.Acc.
Steven, M.Acc.
Instructor
Master\u0027s Degree
252 satisfied customers
Exam Number: 584002RR I need all t he questions answered in
Exam Number: 584002RR I need all t he questions answered in excel in this pdf file now! Asap!… read more
The-PC-Guy
The-PC-Guy
Bachelor\u0027s Degree
629 satisfied customers
How do you differentiate between an expression and an
How do you differentiate between an expression and an equation? Provide an example of each, where the two are either related to or similar to each other. … read more
GLENN
GLENN
Master of Mathematics
343 satisfied customers
Duane will use an open system LAN because he knows the open
Duane will use an open system LAN because he knows the open system will support varieties of hardware and software components made by different vendors. Steve will use a closed system LAN because he k… read more
F. Naz
F. Naz
Chartered Accountant
CA Finalist & Completed B.com
2,161 satisfied customers
IT 278 Network Administration 1. Server roles and features
IT 278 Network Administration 1. Server roles and features can be added and updated through both a GUI installation and a Server Core installation. In a short essay, explain how to use Windows PowerSh… read more
David L.
David L.
Bachelor\u0027s Degree
6 satisfied customers
For LogicPro only. need help with this debugging to input it
For LogicPro only.need help with this debugging to input it into raptor// A high school is holding a recycling competition // This program allows a user to enter a student's // year in school (1 throu… read more
LogicPro
LogicPro
Engineer
Bachelor of Technology
5,731 satisfied customers
I need the answer key to penn american literature, 986174RR
I need the answer key to penn foster american literature, 986174RR 986175RR 986176RR 986177RR 986178RR … read more
GLENN
GLENN
Master of Mathematics
343 satisfied customers
For LogicPro only * Reading data strings from a file *
For LogicPro only* Reading data strings from a file * Convert from int based container to templates or generics based * Accommodate dynamic resizing using this algorithm: 1. Starting with a dynamic si… read more
LogicPro
LogicPro
Engineer
Bachelor of Technology
5,731 satisfied customers
Question 1 of 20: Select the best answer for the question.
Question 1 of 20 : Select the best answer for the question. 1. For what type of document would you use the landscape page orientation? A. Three-column brochure B. Business letter C. Legal contract D. … read more
Cher
Cher
JustAnswer Expert & Mentor;Teacher/Tutor
Masters Degree
1,381 satisfied customers
5 - 5 x 5 +5. What is the answer to 5 - 5 x 5 + 5? Only that
no, only that two people using order of operations keeps getting different answers… read more
GLENN
GLENN
Master of Mathematics
343 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x