Question

In: Economics

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the...

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says “I’ll take 10 lottery tickets,” and Barb says “I’ll take $10 worth of lottery tickets.” What is each person’s price elasticity of demand for lottery tickets? Explanation?

Please do not copy and paste.

Solutions

Expert Solution

Price elasticity of demand(Ed)= % change in quantity demand / % change in price

Price elasticity of demand helps to measure the proportionate change in quantity demand due a unit change in price.

Ed is less than 1 or inelastic demand refers to the situation when price of the commodity does not have significant impact on quantity demand.

Ed is greater than 1 or elastic demand refers to the situation when price of the commodity does have significant impact on quantity demand.

Here, Adam does not give due importance to the price of the lottery that is price does not have much impact on Quantity demand for lottery tickets by Adam. So for Adam the demand for lottery is inelastic or Ed<1.

Barb says “I’ll take $10 worth of lottery tickets” it implies that Barb give due importance to the price that is if price increase or decrease it will have a significant impact on quantity demand for lottery tickets by Barb. So for Barb the demand for lottery is elastic or Ed>1.


Related Solutions

Adam and Barb go to the store to purchase some lottery tickets. Without looking at the...
Adam and Barb go to the store to purchase some lottery tickets. Without looking at the price, Adam says “I’ll take 10 lottery tickets,” and Barb says “I’ll take $10 worth of lottery tickets.” What is each person’s price elasticity of demand for lottery tickets? (Not a math problem) Explanation?
Why do the price of some goods like Airline tickets to Europe go up during the...
Why do the price of some goods like Airline tickets to Europe go up during the months of heaviest consumption, while others like sweet corn go down during the months of heaviest consumption.
If society uses rational behavior why do some lottery winners go broke? The bulk of economic...
If society uses rational behavior why do some lottery winners go broke? The bulk of economic analysis continue to reply on rational assumptions. Economist continue to contend that rational thought is a reasonable viewpoint. Is this a micro or macroeconomic issue? Is this a reasonable assumption? Is this a positive or normative assumption? How does self-interest come into play? Explain why economics a science or a social science?
Some people just download programs without really looking at what they are downloading. This can lead...
Some people just download programs without really looking at what they are downloading. This can lead to a lot of problems. To the class, In what ways do you protect yourself with technology? I am thinking in simple ways like spyware etc. Give examples. CMGT/442 Information Systems Risk Management
Question 4: Capital Budgeting (SHOW WORK WITHOUT EXCEL) OLA Industries is looking to purchase new machinery,...
Question 4: Capital Budgeting (SHOW WORK WITHOUT EXCEL) OLA Industries is looking to purchase new machinery, replacing their old one costing $400,000 with a market value of $200,000. The CFO, OLA, is optimistic and believes the equipment can be sold for $100,000 at the end of its 10-year life, however, doesn’t think he’ll be able to sell the old equipment at the end of its 10-year life. The old equipment was purchased 6 years ago. CCA = 20%             Tc =...
STEP 1: Either go to a toy store or find some toys online. Pick toys that...
STEP 1: Either go to a toy store or find some toys online. Pick toys that would be appropriate for each of the following ages: 6 months old 4 years old 8 years old STEP 2: Describe the toy and its purpose. STEP 3: Describe both Piaget’s and Erikson’s stages of development at this age and explain why the toys you chose are appropriate for that age group. Add supporting evidence from your text. Each explanation should be in a...
How have some grocery store product categories such as grab-and-go/convenience items benefitted from COVID-19?
How have some grocery store product categories such as grab-and-go/convenience items benefitted from COVID-19?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT