Essays on Price Elasticity Of Demand

Demand function (QD) = -5200 - 42P + 20PX + 5.2I + 0.2A + 0.25M Where; P= 500, PX=600, I=$5,500, A=$10,000 and M=5,000

Replace values in the equation;

QD = -5200 - 42(500) + 20(600) + 5.2(5,500) + 0.2(10,000) + 0.25(5,000) = -5200 – 21,000 + 12,000 + 28,600 + 2,000 + 1,250 = 17,650 Price elasticity of demand = ∂QD∂P×PQD ∂QD = change in quantity demanded, ∂P = change in price; P= price, QD = quantity demanded ∂QD∂P = -42 QD= 17,650 P= 500 Price elasticity of demand = -42 ×50017,650 = -1.1898 The above elasticity indicates that the product’s quantity demanded ...

Determination and interpretation of elasticities

Demand function, QD = -3,500 – 150P + 30A + 75PX + 10 Y P = 300 cents, A = $750, PX = 200 cents and Y = $10,000 QD = -3,500 – (150 × 300) + (30 × 750) + (75 × 200) + (10 × 10,000) = -3,500 – 45,000 + 22,500 + 15,000 + 100,000 = 89,000 units

Price elasticity of demand

Price elasticity of demand = ∂QD∂P × PQD

Change in quantity demanded/change in price, ∂QD∂P is the coefficient of price, P in the demand equation.

∂QD∂P = -150 QD = 89,000 P = 300 cents PED = -150 × 30089,000 = -0.5056 The above price elasticity of demand indicates that the quantity demanded of the low-calorie, microwavable food decreases by 0.5056% for every increase in price by one cent. The elasticity is less ...

American Public University

1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + 0.20A + 0.25M and Q = Quantity demanded of 3-pack units P (in cents) = Price of the product = 500 cents per 3-pack unit PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5,500 A (in dollars) = Monthly advertising expenditures = $10,000 M = Number of microwave ovens sold in the SMSA in which the supermarkets ...

American Public University

1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. The demand estimation as follows: QD = -3,500 - 150P + 30A + 75PX + 10Y. When P=300, A=750, PX=200, and Y=10,000. Placing these numbers into equation: QD=-3,500-150(300)+30(750)+75(200)+10(10,000)=QD=-3,500-45,000+22,500+15,000+100,000=89,000. Under given these numbers, we have 89,000 products demanded. Price elasticity of demand is [d(QD)/d(P)]/[QD/P]. Therefore, we take a derivative of the function subject to price, and we assume other variables do not ...

Introduction:

The main purpose of writing this report is to determine the marketing metrics and marketing effectiveness of Apple. Marketing metrics are the performance indicators, which permits the business to perform overall marketing performance. The marketing metrics help to attain greater accuracy in the business activities. Marketing plays an active role in the business and the success lies in the marketing abilities. The marketing metrics are categorized into various types’ namely behavioral, financial, physical availability and consumer profile etc. In this report, these metrics with respect to Apple Inc. will be discussed. As a marketing consultant, I will provide the ...

Current market conditions competitive analysis

Estee Lauder Cos.Inc Estee Lauder Cos. Inc is an American based company that manufactures and markets prestige skincare, fragrance, hair products, and makeup. The company has owned various investments of labels that are internationally distributed to give it a global reach. It establishes departmental stores in various regions. Estee Lauder Cos. Inc has achieved a global leadership in by delighting its consumers with a variety of transformative products, high consumer experiences, and improved capacity to inspire its consumers to express their beauty with its prestigious products. The company is focused solely on its specific beauty products with more than ...

Government Actions in Markets

Figure 1 As a result of increasing the passenger movement tax on airlines, the equilibrium price P2 moves to new point P1. (P1>P2) The new quantity of flights is Q1. Therefore demand decreases, Q1 <Q2. Because of the increased prices some consumers denies to purchase tickets choosing other flight companies or using alternative ways of transportation. A tax that is imposed on sellers in fact creates a burden on consumers as well because of the fact that consumers will be forced to pay higher prices. It is clearly shows on the Figure1 that the revenue from sellers ...

ASSIGNMENT ANSWERS

Question 1 Price Elasticity of demand (PED) can be defined as the measure of the relationship that occurs between the difference of the quantity which is demanded for one good and the difference in its price. It helps to discover to what extant good is sensitive to changes of the price (Cordes, Ebel, Gravelle 2005). The formula for PED = % Change in Quantity demanded / % Change in the Price. A product is sad to be price elastic or responsive to price changes when a small change in price causes a more than proportionate change in the demand of the product. ...

On August 30, 2016, Laura Dimon and Ginger Adams Otis wrote an article for The Daily News under the headline “Protesters gather in NYC to show outrage of skyrocketing EpiPen prices.” The article highlights a controversy that is ongoing as this is typed – the price of potentially life-saving EpiPens has increased fivefold in the decade since Mylan Pharmaceuticals acquired the product. One of the clear economic concepts that the EpiPen controversy demonstrates is elasticity of demand. As Guo (2012) points out discussing price elasticity of demand, the concept is simple. It is intuitive as well. When prices go up ...

ECONOMICS

Absolute and comparative advantages. England has absolute advantages in producing scones (50 > 4), Scotland has absolute advantages in sweaters production (2 > 1). As for comparative advantages, England should be focused on scones production as well (alternative costs for 50 scones is only 1 sweater); Scotland has comparative advantages in sweaters production (alternative costs for 1 sweater is only 20 scones). So, for both absolute and comparative advantages, England should produce scones, Scotland – sweaters. If England and Scotland decide to trade, Scotland will trade sweaters to England. It could be explained by theory of absolute and comparative advantages ( ...

Guo (2012) gives the explanation for the concept of price elasticity of demand. It is simple and, when you think of it, obvious. With a very few exceptions, price increases will drive demand down. Interestingly enough, the controversy over EpiPens in the news today provides a good example of price elasticity of demand. The classic example is a drug addict or the slightly less addicted cigarette smoker. Price was essentially irrelevant to demand to these groups of consumers. The converse condition is also, then, true. Products that are commodities are essentially perfectly price elastic. Gas wars, for example, are ...

First Assignment: Week 5

There are four main types of research, which are Primary Research Secondary Research Qualitative Research Quantitative Research Primary Research In primary research, the data is collected via any method other than secondary research for the first time. The primary data is, however, from a researcher for a particular purpose at hand. Primary research is easily applicable and also easily usable, if done properly; it is up-to-date, reliable and accurate. But, as a matter of fact it is expensive, not immediately available, and is also not readily and easily accessible. Secondary Research In secondary research, the data is collected from ...

Introduction

Can colleges and universities increase their tuition rates continuously, despite the suffering they cause students? This issue can be and has been tackled by economics – specifically; we can use the tools offered by the study of price elasticity of demand to see what colleges take into consideration before raising their prices. The reaction of students to the increasing tuitions and other expenses might be a driving force on the demand side for higher education. If the students believe that higher education’s high costs will not create a value equal to or less than its cost, they might prefer ...

The habit of tobacco use has been proven to be a leading cause of premature deaths in the United States. Additionally, factors associated with exposures related to environmental tobacco smoke (ETS) have been the leading causes of increasing mortality and morbidity levels in the country and at the global scale. To this effect, therefore, there is the need for having in place policy issues that will effectively address tobacco use amongst children and adolescents, reduce the smoking rates amongst adults and finally prevent non-smokers from being exposed to ETS (World Health Organization, 2013). As it has been established, most ...

Overview

The company upon which this market analysis is based is Estee Lauder Cosmetics INC. The history of Estee Lauder Cosmetics INC. can be traced back to 1946 when the company began operations. The founder of the cosmetics company was Estee Lauder. The premise upon which the company was founded was that there is an inherent beauty in every woman. The company has added more products its product line as a mark of its continued growth over the many decades the company has been in operation (Estee Lauder Cosmetics INC., 2016). Over the seven decades in which the company has ...

Introduction

Can colleges and universities increase their tuition rates continuously, despite the suffering they cause students? This issue can be and has been tackled by economics – specifically, we can use the tools offered by the study of price elasticity of demand to see what colleges take into consideration before raising their prices.

Let us assume that, in an attempt to raise more revenue, New York State University increases its tuition rates. Will this necessarily result in more income for the university? Not always. As we know, revenue depends on price and quantity of the demanded good or service. In the ...

Suppose that, in an attempt to raise more revenue, Nobody State University increases its tuition. Will this necessarily result in more revenue? Not necessarily. As we know, revenue depends on price and quantity of a given good or service; in the case of Nobody State, Revenue = Tuition Price x Number of Enrolled Students If tuition price increases, the number of students will likely fall as fewer students will be able to afford Nobody State and will favor its nearby competitor, Anybody Community College. As we can see, the qualitative aspect of demand is easy to grasp (increase prices, lower ...

Identify two microeconomics and two macroeconomics principles or concepts from the simulation/ video. Explain why you have categorized these selected principles or concepts as microeconomics or macroeconomics. The main concepts displayed in the video are the law of supply and law of demand. These concepts are common to microeconomics and macroeconomics. Law of supply is a positive relationship between quantity of goods and services and its price. When price of a good rises, the quantity supplied of the good increases accordingly. With much higher price producers are willing to supply more goods and services. Law of demand depicts negative ...

Abstract

Wesco International Inc, which is an American publicly traded company currently, operating in the U.S. The company supplies electrical and repair products and is based in Pittsburgh, Pennsylvania. Most of the company’s business is conducted in the United States. This article provides a microeconomic analysis by reviewing the current demand and supply situation of the company as well as the involved costs of production and recommended strategies that the company could adopt to gain a competitive power.

Introduction

Maintaining successful operations is a hard task for multinational corporations especially in the current market trends and fluctuating customer demands. However, ...

Changes in Market Equilibrium

The interaction of the forces of demand and supply determines the equilibrium price and quantity in a perfectly competitive market. A market is in equilibrium when no buyer or seller has any incentive to the change in the commodity that he or she buys or sells at the given price. The equilibrium price of a commodity is the price at which the quantity demand of a commodity equals the quantity supply and the market clears. The process by which the equilibrium is reached is shown by the intersection of the demand and supply curve of the commodity.

Summary of the Video

The video " ...

The American Civil War led to the reduction of government revenue and large debts amassed from the financing of war operations. One strategy that the government implemented was using taxes to raise the funds from the public. This approach led to certain products being taxed, for this reason, one of them being tobacco. However, with time, these taxes were effectively recalled with the exception of cigarette taxes, which have remained to the present time. Tobacco has been identified as one of the oldest crops in the U.S and has also been cited as one of the most successful enterprises, ...