Question

In: Economics

5.) Suppose that a 10% discount on the price of Tempur-Pedic mattresses results in quantity demanded...

5.) Suppose that a 10% discount on the price of Tempur-Pedic mattresses results in quantity demanded to increase by 5%. Based on this information, demand for Tempur-Pedic is:

inelastic

unitary elastic

income elastic

6.) Suppose the government wants to reduce teenage smoking by 50%. If the teenage elasticity of demand for a pack of cigarettes is 2, by what percentage would the government have to increase the price of a pack of cigarettes to achieve their goal?

10%

25%

100%

7.) Which one of the following factors would reduce the elasticity of demand for a particular product?

more time to shop around

no close substitutes

big part of budget

Expert Solution

Answer:- Suppose that a 10% discount on the price of Tempur-Pedic mattresses results in quantity demanded to increase by 5%. Based on this information, demand for Tempur-Pedic is:

Correct Answer:- inelastic

Reason:- Percentage change in price is quantity is less than the percentage change in price.

6.) Suppose the government wants to reduce teenage smoking by 50%. If the teenage elasticity of demand for a pack of cigarettes is 2, by what percentage would the government have to increase the price of a pack of cigarettes to achieve their goal?

Elasticity = Percentage change in quantity demanded / percentage change in price

percentage change in price =Percentage change in quantity demanded/ Elasticity

percentage change in price = -50/2 =25%

so correct answer = 25%

Answer:- 7.) Which one of the following factors would reduce the elasticity of demand for a particular product?

Correct Answer:- No close substitute

PLEASE RATE THE ANSWER AS THUMBS UP. THANKS A LOT

Rahul Sunny answered 1 year ago

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