# Elasticity and Its Application

SoccerBoss
Category:
Economics
Price: \$15 USD

Question description

Over the last year your boss has noticed that it would be useful for your firm to understand how consumers behave when variables in the market change and how these changes affect the total revenue for your product. You have been asked to do an analysis for your product, Good A, by addressing the following questions and reporting the results to your boss in a formal paper.

Questions: 1.Define the price elasticity of demand? What information does it provide? How is it calculated?

2.Define the income elasticity of demand? What information does it provide? How is it calculated?

3.Define the cross-price elasticity of demand? What information does it provide? How is it calculated?

4.What is total revenue? How is it calculated?

5.Define elastic, inelastic, and unitary elasticity means. How are these related to total revenue? Explain your answers.

6.With respect to the price elasticity of demand, construct a graph using the data in Figure1. Illustrate the ranges on the demand curve that indicate elastic, inelastic, and unitary elasticity. Explain your answers. Enter non-numerical responses in the same worksheet using textboxes.

7.Calculate the total revenue for each level of demand and post into the table, Figure 1. (Copy and paste this table into the Microsoft Word document that will form part of your submission.)

8.Using the midpoints formula presented in the textbook, calculate the price elasticity coefficient for each price level, starting with the coefficient for the \$4 to \$6 level. For each coefficient, indicate each type of elasticity: elastic demand, inelastic demand, or unitary demand. Post your answers into the table, Figure 1.

9.Assume that the income of consumers changes by 10%, and as a result the quantity demanded for Good A changes by 8%. What is the income elasticity of demand for Good A? What does this mean for your company?

10.Assume that the price of competing Good B decreases by 5% and as a result, the quantity demand for Good A decreases by 8%. What is the cross-price elasticity for your product? What type of goods are Good A and Good B?

Figure 1: The Demand Schedule for Barbeque Dinners

Price Quantity Demanded Total Revenue Elasticity Coefficient Elastic or Inelastic

\$4 100 __________ XXXX XXXX

6 80 __________ __________ __________

8 60 __________ __________ __________

10 40 __________ __________ __________

12 20 __________ __________ __________

14 1 __________ __________ __________

Required:

Prepare an analysis by answering the above-noted questions. Your analysis will consist of two documents as follows: 1.Microsoft Word document: Questions 1-5, 7-10. 2.Microsoft Excel worksheet: Question 6

(Top Tutor) Daniel C.
(997)
School: UCLA
Studypool has helped 1,244,100 students

Type your question here (or upload an image)

1822 tutors are online

### Related Economics questions

08/14/2015
08/14/2015

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors