# Microeconomics

posted by .

A sporting goods store has estimated the demand curve for a popular brand of running shoes as a function of price. Use the diagram to answer the questions that follow.

a. Calculate demand elasticity using the midpoint formula between points A and B, between points C and D, and between points E and F.
b. If the store currently charges a price of \$50, then increases that price to \$60, what happens to total revenue from shoe sales (calculate P × Q before and after the price change)? Repeat the exercise for initial prices being decreased to \$40 and \$20, respectively.
c. Explain why the answers to a. can be used to predict the answers to b.
(Principles of Microeconomics, 9th Edition. Pearson Learning Solutions 9.9).
<vbk:0558508650#outline(9.9)>

• Microeconomics -

3

## Similar Questions

1. ### Microeconomics-Algebra Calculation

Consider public policy aimed at smoking. Studies indicate that the price elasticity of demand for cigarettes in about 0.4. If a pack of cirarettes currently costs \$2 and the government wants to reduce smoking by 20 percent, by how …
2. ### Microeconomics; price elasticity of demand

Please check and correct my answers? Thank you. QUESTIONS: 1. The time horizon of the demand curve is one determinant of the price elasticity of demand. Compared to the short-run demand for oil, the demand for oil in the long run will
3. ### Microeconomics

I am not sure whether these questions are true or false: 1. Surpluses of dairy products that have regulated prices usually occur because the demand is price inelastic. 2. You observe that a linear demand curve shifts to the right, …
4. ### managerial economics

Exercise 1 The marketing manager has estimated the company’s demand curve with the equation P=3000 – 40Q. To develop a deeper understanding of pricing and quantity to be produced, complete the following analyses: 1. Draw the demand …
5. ### economics

Suppose the price of widgets falls from \$7 to \$5 and consumption of widgets rises from 15 widgets a month to 25 widgets. Calculate your price elasticity of demand of widgets. What can you say about your price elasticity of demand of …
6. ### Econ

Coca-Cola in dispensers located on a golf course sells for \$1.25 a can, and golfers buy 1,000 cans. Assume the course raises the price to \$1.26 (assume a penny raise is possible) and sales fall to 992 cans. a. Using the midpoint formula, …
7. ### Calculus

When an electronics store prices a certain brand of stereos at p hundred dollars per set, it is found that q sets will be sold each month, where q2 + 2 p2 = 41. a. Find the elasticity of demand for the stereos using implicit differentiation. …
8. ### Economics

Hi, The demand for inflatable garden gnomes is given by P = 300 – 2Q, while the supply of is P= 100 + Q/2. How many garden gnomes are traded in equilibrium?
9. ### econmics

Suppose the price of widgets rises from \$7 to \$9 and consumption of widgets falls from 25 widgets a month to 15 widgets. Calculate your price elasticity of demand of widgets. What can you say about your price elasticity of demand of …
10. ### Economics

1.calculate the price elasticity of demand when the price was increased from R25 to R40 ?

More Similar Questions