https://www.youtube.com/watch?v=twVGtofCxO0

Watch the Purse Elasticity of Demand episode of Shark Tank - Season 5, Episode 10

Watch the Purse Elasticity of Demand episode of Shark Tank - Season 5, Episode 10: Jenn Deese and Kelley Coughlan pitch Purse case, a smartphone case that doubles as a small purse. Kevin O'Leary is flabbergasted by its high price and immediately argues they could change cut the price by 50% and sell ten times more than they are currently selling. In his mind, Purse Case is a product with very elastic demand - so elastic that he thinks they could lower the price and collect much more in revenue.

Question 1 A: Based on the sales numbers given in the video, calculate the elasticity of demand for this product perceived by Mr. O'Leary. Show step wise calculations starting with the formula. (10 Points)

Question 1 B: Kevin suggests lowering the price to $19.95 will result in ten times more sales. If Kevin is right, is demand elastic or inelastic? Support your answer by calculating total revenue. (10 points)

Question 2 : Suppose that a 20% increase in the price of gasoline causes a 5% decrease in the consumption of gasoline and a 30% drop in the sales of SUVs. What can you say about elasticities? Describe the nature of the relation between two products (5 Points)

Listen to the following podacst:

https://www.npr.org/2020/07/15/891488686/summer-school-2-markets-pickles

https://www.npr.org/transcripts/891488686

Question 3:

Pick a local DFW organization that you know well, maybe your workplace, a chain-restaurant, or any other local business. Tell us where exactly that business is located. Are the decisions made from the top by people with limited information or are decisions made at the local level? Now imagine how that organization could change. (10 Points)

Season 3, Episode 11: "Wine Balloon," owned by Eric Corti, produces a wine-preserving product. The product currently sells for $22 and costs $6.50/unit when production is at 700 units. The sharks advise that the potential to cut costs are huge and hence increase revenue. If he produces 100,000 production cost per unit will fall to $2.50. That would be a $4/unit savings!

Question 4 A: This nicely illustrates economies of scale. Do you agree? What do you mean by economies of scale? (5 points)

Question 4 B: Calculate total costs using the average cost formula for both low and high production levels. (10 points)