1. The elasticity of demand for marijuana is -0.5. If the price of marijuana increases by...

1. The elasticity of demand for marijuana is -0.5. If the price of marijuana increases by 10%, by how much does quantity demanded decrease?

Expert Solution

Since, elasticity of demand= proportionate Change in quantity demanded/proportionate Change in prices

So, -0.5 = proportionate Change in quantity demanded/10

or proportionate Change in quantity demanded= -0.5×10 = -5 %

Hence, when the price of marijuana increases by 10 %, the quantity demanded of marijuana decrease by 5 %. Ans.

Rahul Sunny answered 2 years ago

Suppose the income elasticity of demand for food is 0.5 and the price elasticity of demand...

Suppose the income elasticity of demand for food is 0.5 and the price elasticity of demand is -1.0. Suppose a hypothetical group of people spend $10,000 a year on food, the price of food is $2, and that their total income is $25,000. a. If a sales tax on food caused the price of food to increase to $2.50, what would happen to their consumption of food? b. Suppose they will get a tax rebate of $2500 to ease the...

As price elasticity of demand increases, the burden of a taxgets _______; as price elasticity...

As price elasticity of demand increases, the burden of a tax gets _______; as price elasticity of supply increases, the burden of a tax gets _________.(Here, you can read "bigger" as "heavier" and "smaller" as "lighter" if that helps.)A. smaller; biggerB. bigger; smallerC. smaller; smallerD. bigger; bigger

Suppose the price elasticity of demand for smartphones is 0.5 (absolute value), while the price elasticity...

Suppose the price elasticity of demand for smartphones is 0.5 (absolute value), while the price elasticity of supply is 1.9. a) Are the demand and supply of smartphones price elastic or price inelastic? Briefly explain. b) In order to increase total revenue, should the sellers of smartphones raise or cut the price? Explain with a diagram. c) If the government imposes a per-unit tax of $100 on the sellers of smartphones, how will the price and quantity transacted of smartphones...

Elasticity of demand curve 1 = - 0.5 Elasticity of demand curve 2 = - 2.5...

Elasticity of demand curve 1 = - 0.5 Elasticity of demand curve 2 = - 2.5 Elasticity of demand curve 3 = - 0.2 Which of the following provides the greatest moral hazard potential? Group of answer choices all provides identical levels of moral hazard D2 D3 D1

Two goods are _______ if their cross-price elasticity is 0.5. A good is a(n) good if its income elasticity of demand is 0.5.

Two goods are _____________ if their cross-price elasticity is 0.5. A good is a(n) ______ good if its income elasticity of demand is 0.5.Group of answer choices：Weak substitutes: NecessityClose substitutes: LuxuryWeak complements: NormalClose complements: Inferior

The price elasticity of demand for cat food is -0.4 and the price increases by 6%. ...

The price elasticity of demand for cat food is -0.4 and the price increases by 6%. a. How much will sales of cat food change? Show your work. b. What will happen to consumer expenditures on Purina cat food? Explain.

a) Price elasticity of demand for cigarettes is -0.5 in the short-run. Currently, the price per...

a) Price elasticity of demand for cigarettes is -0.5 in the short-run. Currently, the price per pack of cigarettes is $5.50 in Louisiana. $0.86 of this price is state tax and about $1 of the price is federal tax. Each year 350 million packs of cigarettes are sold in Louisiana. If the state government increases the state tax to $1.08 per pack, what would be the new state tax receipts from cigarettes after this tax increase? b) How would your...

When price elasticity of demand is equal to unity, a small decrease in price: increases total...

When price elasticity of demand is equal to unity, a small decrease in price: increases total revenue. decreases total revenue. has no effect on revenues. raises marginal revenue.

Compute the price elasticity of demand if price increases from $10 to $12 and quantity demanded...

Compute the price elasticity of demand if price increases from $10 to $12 and quantity demanded falls from 600 to 400. Use the value obtained and a specific example to determine whether price must be increased or decreased to increase total revenue. Explain why. Note: Explain only how to increase total revenue, not decrease it.

1.) the price elasticity of demand for margarine is -1.3 and the income elasticity of demand...

1.) the price elasticity of demand for margarine is -1.3 and the income elasticity of demand for margarine is -0.2. a. Based on these figures, is the demand for margarine elastic or inelastic? How can you tell? b. If the price of margarine falls by 5%, by what percentage will the quantity of margarine demanded change? Will it rise or fall? c. If the price of margarine falls by 5%, by what percentage will the total revenue from sales of...

Question