Please explain question: 2, 8, 13 and 14
Chapter 20 EXERCISES (using the point form), cross-price clasticity with good x, and income clasticity. Q=8-2P +0.101 + P. Use the following hypothetical demand schedule for movies to do exercises 1-4. States R. Cars made in Japan and cars made in the United Q is quantity demanded, P is the product price, P. Explain how consumers will react to a job loss. Why is the price of a related good, and / is income. Assume Quantity Demanded Price Elasticity will be the first goods they will do without? What is the that P= $10, 1 100, and P. = 20, income elasticity of demand for those goods? 14. Plot the following price and quantity. Then calculate 8 8 $ 10 8 Calculate the Income elasticity of demand from the fit price elasticity of demand at P = 8, P = 4, and P. 2 60 3 15 lowing data (use the arc or average), 40 $ 20 Income Quantity Demanded $ 25 $15,000 $ 30 20,000 $20.000 30.000 a. Determine the price elasticity of demand at each quantity demanded using the arc or midpoint a. Explain why the value is a positive number. formula Percentage change in quantity b. Explain what would happen to a demand curve as demanded = (Q - Q,)Q, divided by percenta income changes if the income clasticity was 2.0, Compare that outcome to the situation that would change in price - (P. - P.) /P. Redo exercise la using price changes of $10 rather occur if the income elasticity of demand was 0.2. than $5. a. Use the following figure to show what occurs to Plot the price and quantity data given in the demand price and quantity when supply decreases and schedule of exercise I. Put price on the vertical axis and demand is perfectly clastic b. Use the figure to show what occurs to price and quantity on the horizontal axis. Indicate the price elas ticity value at each quantity demanded Explain why quantity when supply increases and demand is per- the elasticity value get smaller as you move down the fectly inelastic. demand curve. What would a 10 percent increase in the price of movie Perfectly Inelastic tickets mean for the quantity demanded of a movie the Demand iter if the price clasticity of demand was 0.1. 05, 1.0. and 5.07 Using the demand curve plotted in evercise I. illustrate Perfectly Elaife what would occur if the income elasticity of demand Domand was 0:05 and income rose by 10 percent. If the incur elasticity of demand was 3.0 and income nose by 10 per cerit, what would occur? 5. Pick a good whose demand is price elastic. List five sub statutes and five complements. Which is easier to come up with, the list of substitutes or the list of cumple ments? Explain, 30. Explain why a 10 percent across-the-board tax increase Are the following pairs of goods subs on businesses might harm consumers. ments? Indicate whether their emis-price elumend IL The price elasticity of the demand for gasoline is -do The price elasticity of demand for gasoline at Joe's 60 negative or positive. a. Bread and butter station is -1 2. Explain what might account for the d Bread and potatoes ferent elasticities. Socks and shoes 12. The cross-price elasticity of the demand for cell phones Tennis rackets and golf clubs and 13VDs is 1.2. Explain. The cross price elasticity of Bicycles and automobiles the demand for the iPod and DVD's is - 1.4. Explain Foreign iruext ments and do 13, Using the following equation for the demand for a good or service, calculate the price elasticity of demand
