Managerial Economics

PROBLEM SESSION #3 ELASTICITY OF DEMAND AND release Q.1 mercy mensesly buys 100 bottles of her favorite wine at the online impairment of $2. When asked at what determine she would stop buying the interbreeding (the lowest bell at which quantity inviteed is zero units), she answers $6. Based on this information alone, roughly estimate broiders price centering? (1 line) Q.2Present 2 reasons wherefore time of year has a very low price elasticity of look for for. (2 lines) Because there is no direct substitute and because con pairingers spend atomic number 53 small percentage of their incomes on salinity. No close substitutes and salt consumption represent a small fraction of menage expenditure. Q.3T/F and why: A high implore for cigarettes sum ups smoking and puts a burden on aesculapian trouble paid for by all members of society. A higher demand pull up stakes increase smoking and if supply is non vertica l. If supply is downward sloping or horizontal, a higher demand will lead to more cigarettes consumed. Although medical bills increase as more smokers get sick, smokers may likewise give off early than the rest of the population. Hence it is realistic for smokers to reduce medical bills overall and reduce the burden on society. Q.

4At a recent company meeting, you heard, one of the passenger vehicles, give tongue to: We strongly decide the market. We have pricing power. We organized the price to $100 from $80 and sales dropped only slightly. I conjecture we can raise prices further. If we ma ke more get when the price is $100, then we! will make even more profits when the price is $ cxx and keep the price at $ broad hundred. Comment on the remarks. The manager apparently assumes that if demand is inflexible in the $80-$100 price segment, it will continue to be inelastic in the $100-$long hundred segment. However, consider that substitutes that were previously not economical may pass more pleasing if the price increases to $120. Thus the $100 - $120 segment may be elastic. As the price increases, revenues fall...If you take to get a full essay, order it on our website: OrderCustomPaper.com

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