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Quote of the Day

Quote of the Day. "Empire" had the better ending. Luke gets his hand cut off, finds out Vader is his father, uh, Han gets frozen, taken away by Boba Fett. It ends on such a down note. I mean, that's what life is, a series of down endings. All "Jedi" had was a bunch of Muppets.

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Quote of the Day

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  1. Quote of the Day "Empire" had the better ending. Luke gets his hand cut off, finds out Vader is his father, uh, Han gets frozen, taken away by Boba Fett. It ends on such a down note. I mean, that's what life is, a series of down endings. All "Jedi" had was a bunch of Muppets.

  2. Sofia advertises to sell cookies for $4 a dozen. She sells 50 dozen, and decides that she can charge more. She raises the price to $6 a dozen and sells 40 dozen. What is the elasticity of demand? Assuming that the elasticity of demand is constant, how many would she sell if the price were $10 a box?

  3. [(Q2 – Q1 ) / Q1] / [(P2 – P1) / P1] Initial = 4$, 50 dozen New = 6$, 40 dozen Ed = [(40 – 50) / 50] / [(6 – 4) / 4] = -0.4 Initial = 4$, 50 dozen New = $10, x dozen -0.4 = [(x – 50) / 50] / [(10 – 4) / 4] x = 20

  4. Suppose the price of a particular good increases from $95 to $125. As a consequence, you decrease your purchases of the good from 21 units to 15 units. a. What is the price elasticity of demand for this good? b. Is demand for this good elastic, inelastic, or unit elastic?

  5. [(Q2 – Q1 ) / Q1] / [(P2 – P1) / P1] Initial = $95, 21 units New = $125, 15 units Ed = [(15 – 21) / 21] / [(125 – 95) / 95] = -0.9 Inelastic TR = PxQ

  6. Suppose the price of a particular good increases from $5.75 to $6.25. You then decrease your purchases of the good from 18 to 14. a. What is the price elasticity of demand for this good? b. Is demand for this good elastic, inelastic, or unit elastic? c. Did total revenue for this firm increase, decrease, or remain the same as a result of the price increase?

  7. [(Q2 – Q1 ) / Q1] / [(P2 – P1) / P1] Initial = $5.75, 18 units New = $6.25, 14 units [(14 – 18) / 18] / [(6.25 – 5.75) / 5.75] =-2.55 Elastic TRinitial= 103.5 TRnew= 87.5

  8. Suppose the price of good A increases from $12.50 to $17.00. As a consequence, you increase your purchases of good B from 39 units to 47 units. a. What is the cross elasticity of demand? b. Are these goods substitutes or complements?

  9. Cross-Price Elasticity = [(Q2good b – Q1good b ) / Q1 good b] / [(P2 good a – P1good a) / P1 good a] Good A Initial = $12.50, New = $17.00 Good B Initial = 39 units, New = 47 units CPE = 0.57 Cross-Price Elasticity suggest the two goods are substitutes

  10. Suppose your income increases from $40,000 to $52,000. You then decrease your purchases of a particular good from 7 to 2. a. What is the income elasticity of demand for this good? b. Is this good a normal good or an inferior good?

  11. Income Elasticity = [(Q2 – Q1 ) / Q1 ] / [(I2 – I1) / I1] Initial Q = 7 New Q = 2 Initial I = 40,000 New I = 52,000 [(2 – 7) / 7] / [(52,000 – 40,000) / 40,000] IE = -2.38 The Good is an inferior good…Like Reed.

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