(Solved): 1. Graph the accompanying demand data, and then use the midpoint formula for E, to determine price ...

1. Graph the accompanying demand data, and then use the midpoint formula for E, to determine price elasticity of demand for each of the four possible $1 price changes. What can you conclude about the relationship between the slope of a curve and its elasticity? Explain in a nontechnical way why demand is elastic in the northwest segment of the demand curve and inelastic in the southeast segment. Product Quantity price demanded $5 4 3 2 1 5 2. Calculate total-revenue data from the demand schedule in question 1. Graph total revenue below your demand curve. Generalize about the relationship between price elasticity and total revenue. C2437 12345 2 3 4 4. What are the major determinants of price elasticity of demand? Use those determinants and your own reasoning in judging whether demand for each of the following products is probably elastic or inelastic: 5. What is the formula for measuring the price elasticity of supply? Suppose the price of apples goes up from $20 to $22 a box. In direct response, Goldsboro Farms supplies 1200 boxes of apples instead of 1000 boxes. Compute the coefficient of price elasticity (midpoints approach) for Goldsboro's supply. It its supply elastic, or is it inelastic? 6. Suppose the cross elasticity of demand for products A and B is +3.6 and for products C and D is -5.4. What can you conclude about how products A and B are related? Products C and D? 7. The income elasticities of demand for movies, dental services, and clothing have been estimated to be +3.4, +1.0, and +0.5 respectively. Interpret these coefficients. What does it mean if the income elasticity coefficient is negative?