Answer to Question #165401 in Macroeconomics for retaa aga

Question

Question five: Suppose that business travelers and vacationers have the following demand for airline tickets from City X to City Y:

             

                                            

a)     As the price of tickets rises from $200 to $250, what is the price elasticity of demand for (i) business travelers and (ii) vacationers? (Use the arc elasticity method in your calculations.)

b)     Why might vacationers have a different elasticity from business travelers?

Part II: 20%

Question One: Mathematically show that

 

                                                             

Where MR is marginal revenue; ε_p is price elasticity of demand

Question Two: TV is contemplating a T-shirt advertising promotion. Monthly sales data from T-shirt shops marketing the “Eye Watch KRMY-TV” design indicate that

                             Q = 1,500 – 200P

where Q is T-shirt sales and P is price.

A. How many T-shirts could KRMY-TV sell at $4.50 each?

B. What price would KRMY-TV have to charge to sell 900 T-shirts?

C. At what price would T-shirt sales equal zero?

D. How many T-shirts could be given away?

E. Calculate the point price elasticity of demand at a price of $5.

Question Three: Silkwood Enterprises specializes in gardening supplies. The demand for its new brand of fertilizer, Meadow Muffins, is given by the equation Q = 120 - 4P.

a. Silkwood is currently charging $10 for a pound of Meadow Muffins. At this price, what is the price elasticity of demand for Meadow Muffins?

b. At a price of $10, what is Silkwood’s marginal revenue?

c. What price should Silkwood charge if it wishes to maximize its total revenue?

d. At the total revenue maximizing price, what is the price elasticity of demand for Meadow Muffins?

Answer 1

Dear retaa aga, your question requires a lot of work, which neither of our experts is ready to perform for free. We advise you to convert it to a fully qualified order and we will try to help you. Please click the link below to proceed: Submit order