1. TheDixie Chicken currently sells 1,500 burger plates per month for $3.50, and the own-price elasticity for this platter has been estimated to be -1.3. If Dixie Chicken raises prices by 70 cents, how many platters will be sold?
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2. Calculatethe income elasticity from the following graph between points A and B and between points B and C. Define as specifically as possible the type of good represented by each income elasticity.
3. Consider the following demand function for bananas.Calculate the own-price elasticity of demand.
4. You read in the Bryan-College Station Eagle that Texas A&M expects the price of tuition to rise by 3% for this coming fall semester. As well, Texas A&M expects the number of admission applications to drop by 2% because of this tuition hike. Assuming all other factors held constant, you conclude that the own-price elasticity of demand for applications to Texas A&M is equal to _______________.
5. Supposethat the own-price elasticity for Schweppes ginger ale is-1.25. In order for Cadbury Schweppes to increase total revenue, at least in the short run, it would be advisable toa.)do nothingb.)lower the price of the ginger ale.c.)raise the price of the ginger ale.d.)can’t tell; insufficient information.6. Generally speaking, which of the following is true?a.) The own-price elasticity at the retail level of the marketing channel is greater than the own-price elasticity at the farmlevel.b.) The greater the number of substitutes of a commodity, thegreaterthe own-price elasticity.c.) The own-price elasticity is more inelastic in the short run thanin thelong run.d.) All of the above.
7. Ifthe own-price elasticity is equal to -0.8, thena.) a1% change in quantity demanded gives rise to a -0.8% change inprice.b.) a10% increase in price gives rise to an 8% decrease in quantitydemanded.c.) a1% increase in price leads to an 8% decrease in quantitydemanded.d.) noneof the above.8. Ifthe own-price elasticity for a good is -1, then the demand for the goodis saidto bea.) elastic.b.) inelastic.c.) unitaryelastic.d.) noneof the above.