Question

In: Economics

a. Ahmed runs a small business. In the first year he charged $45 and sold 1200...

a. Ahmed runs a small business. In the first year he charged $45 and sold 1200 units and in the second year he charged $30 and sold 1800 units. Calculate the price elasticity of demand (Use the midpoint method). If Ahmed plans to raise the price by 10%, indicate what would be a reasonable estimate of what will happen to the quantity demanded and to the total revenue?

b. The table below shows the change of the demand for good A when the price of good B increases from $450 to $540. Quantify the cross-price elasticity of the good A (use the mid-point method) and explain what does it show. Indicate if goods A and B complements or substitutes.

Price of the good A ($)

Price of the good B ($)

Quantity Demanded of the good A

150

450

2100

150

540

2500

Solutions

Expert Solution

If you have any doubt please comment,

Your one like is really help me please, Thank you.

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

Carlos lives in Philadelphia and runs a business that sells pianos. In an average year, he...
Carlos lives in Philadelphia and runs a business that sells pianos. In an average year, he receives $851,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $476,000; he also pays wages and utility bills totaling $281,000. He owns his showroom; if he chooses to rent it out, he will receive $71,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Carlos does...
Question: Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in...
Question: Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka.... Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year. K Capital                                                                                                83,887 Sales                                                                                                  259,870 Trade accounts payable                                                                 19,840 Returns outwards                                                                             13,407 Allowance for doubtful debts                                                          512 Discounts allowed                                                                            2,306 Discounts received                                                                          1,750...
Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka....
Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year. K Capital                                                                                               83,887 Sales                                                                                                  259,870 Trade accounts payable                                                                 19,840 Returns outwards                                                                            13,407 Allowance for doubtful debts                                                         512 Discounts allowed                                                                           2,306 Discounts received                                                                          1,750 Purchases                                                                                         135,680 Returns inwards                                                                               5,624 Carriage outwards                                                                           4,562 Drawings                                                                                           18,440 Carriage inwards                                                                             11,830 Rent, rates and insurance                                                             25,973...
Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka....
Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year. K Capital                                                                                                83,887 Sales                                                                                                  259,870 Trade accounts payable                                                                 19,840 Returns outwards                                                                             13,407 Allowance for doubtful debts                                                          512 Discounts allowed                                                                            2,306 Discounts received                                                                          1,750 Purchases                                                                                         135,680 Returns inwards                                                                               5,624 Carriage outwards                                                                           4,562 Drawings                                                                                           18,440 Carriage inwards                                                                              11,830 Rent, rates and insurance                                                             ...
Ahmed owns Ahmed Manufacturing LLC based in Muscat. In deciding on several important business-related decisions, he...
Ahmed owns Ahmed Manufacturing LLC based in Muscat. In deciding on several important business-related decisions, he has to deal with the following independent scenarios/statements: (i) All future costs are relevant in decision making (ii) A sunk cost is a cost that is yet to be incurred but that can be avoided at least in part depending on the action a manager takes. (iii) A cost that will be incurred regardless of Ahmed’s action is relevant to his decision. (iv) In...
Nick runs a small business conducting online economics tutorials. He has recently noticed a large influx...
Nick runs a small business conducting online economics tutorials. He has recently noticed a large influx of competitors to this market. There are now over 50 companies conducting online economics tutorials in Melbourne alone, each with their own technology and style of teaching. What kind of market structure is this? Make sure you examine each of the characteristics of market structure in your answer. Explain whether the government should be worried about any aspects of this market structure. How can...
Nick runs a small business conducting online economics tutorials. He has recently noticed a large influx...
Nick runs a small business conducting online economics tutorials. He has recently noticed a large influx of competitors to this market. There are now over 50 companies conducting online economics tutorials in Melbourne alone, each with their own technology and style of teaching. What kind of market structure is this? Make sure you examine each of the characteristics of market structure in your answer. Explain whether the government should be worried about any aspects of this market structure. How can...
Contrail Air Inc. runs a small drone manufacturing business. For this year, the company expects real...
Contrail Air Inc. runs a small drone manufacturing business. For this year, the company expects real net cash flow of $210,000. The company expects its cash flow to erode at a rate of 5% percent per year in perpetuity. The appropriate real discount rate for the company is 12% percent. Assume all cash flows received at the end of the year. What is the present value of the cash flows? Cash flow $210,000 Cash flow growth rate -5% Required return...
Andy runs a small pottery firm. in her first year she hired one helper at 12,000...
Andy runs a small pottery firm. in her first year she hired one helper at 12,000 per year, paid annual rent of $5,000 for her shop, and spent $20,000 on material. she has 40,000 of her own funds invested in equipment that could earn her $4,000 per year if alternatively invested. she had been offered $15,000 per year to work as a Potter for a competitor she estimates her entrepreneurial talents are worth $3,000 per year. total annual revenue from...
joe runs a small boat factory. he can make ten boats ler year and sell them...
joe runs a small boat factory. he can make ten boats ler year and sell them each at $35,000. it cost joe 250,000 for the raw materials to build ten boats. joe has invested 500,000 dollars in the boat factory building. ( 200,000 from saving and 300,000 from small business loans at an annual rate of 10%) joe can work at a competing factory working on boats for an annual salary of 80,000 per year. what is the total revenue...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT