Can anyone help me do 9-11 (8) The price of product Y is raised from 559 to 567
ID: 1124084 • Letter: C
Question
Can anyone help me do 9-11
(8) The price of product Y is raised from 559 to 567 per unit and as a result, sales decrease from 430 to 395 units per month. The demand for product Y in the relevant interval is: (a) Elastic. (b) Inelastic. (c) Completely inclastic (d) Perfectly elastic. (e) Unitary elastic. (9) Paul Paulson advocates raising the minimum wage from $$.25 to $7 per hour and he asserts that this will have no effect on employment. This means that he thinks that the demand for the type of labor which is affected by the minimum wage is: (a) Elastic. (b) Inelastic. (c) Completely inelastic (d) Perfectly elastic (e) Unitary elastic. XYZ Corp. is contemplating a 30% increase in the price of the XL-33 screw and they believe that revenues from the sale of this product will rise by exactly 30%,They must think that the demand for the XL-33 screw is (10) (a) Elastic (b) Inelastic. (c) Completely inelastic (d) Perfectly elastic (e) Unitary elastic. (11) Consider the demand schedule below. It gives information about the demand for cups of java at a Startrekk Coffee franchise in Trenton, NJ: Price Quantity $2.80 $2.00 5,000 8,000 The (absolute value of the) coefficient of are price elasticity of demand is: (a) 1.38 (b) 0.86 (c) 0.57 (d) 0.46 (e) 1.15Explanation / Answer
(9) (c)
Elasticity of labor demand is the sensitivity of quantity of labor demanded to a change in wage rate. If an increase in wage rate doesn't change the quantity of labor demanded, it means that sensitivity is zero, and labor demand is completely (perfectly) inelastic (vertical labor demand curve).
(10) (e)
Total revenue (TR) = P x Q
When X% increase in P increases TR by X%, it means that Q has decreased by exactly X%, which happens when demand is unitary elastic.
(11) (a)
Arc price elasticity = (Change in quantity / Average quantity) / (Change in price / Average price)
= [(8,000 - 5,000) / (8,000 + 5,000) / 2] / [$(2 - 2.8) / $(2 + 2.8) / 2]
= [3,000 / (13,000 / 2)] / [- 0.8 / (4.8 / 2)] = (3,000 / 6,500) / (- 0.8 / 2.4)
= - 1.38
Absolute value = 1.38
NOTE: As required, Q9, Q10 & Q100 are answered.