Exam 3: Elasticity

At the ParkNShop online store, the price of 8kg pack of premium Thai fragrant rice is HK$107.90. Use anchoring in consumer thinking to explain why ParkNShop did not price the rice at HK$108.

The government is considering to levy a 10% tax on the sale of cigarettes. How would the effect on tax revenue depend on whether the demand for cigarettes is elastic or inelastic?

The own-price elasticity of the demand for Luna's product is -0.8. Explain how a 10% price increase would affect the company's revenue.

The own-price elasticity of the demand for water among urban residential users is -0.20 in summer and -0.06 in winter. Compare and explain the difference in elasticities by season.

Microsoft offers Office 365 Education at no charge to educators and students at eligible institutions. Explain how this free service affects the own-price elasticity of demand for Office 365 when the students graduate.

Electric power producers have a choice of various fuels, including oil, natural gas, coal, and uranium, as well as solar and wind energy. The cross-price elasticity between the demand for wind power plants and the price of coal would be __________.

Americans consume 126 grams of sugar per day. Suppose that a sugar tax raises the retail price of sugar from US$2.79 to US$3.39 per pound, and reduces consumption to 120 grams per day. What is the own-price elasticity of demand?

Suppose that the advertising elasticity of the demand for an entertainment channel is 1.3. If the producer raises advertising expenditure by 5%, how would that affect the demand?

The government is considering to levy a 10% tax on the sale of cigarettes. How would the effect on tax revenue depend on whether the demand for cigarettes is elastic or inelastic?

Electric power producers have a choice of various fuels, including oil, natural gas, coal, and uranium, as well as solar and wind energy. Do you expect the cross-price elasticity between the demand for wind power plants and the price of coal to be positive or negative?

Changes in the price of an item may affect the income elasticity of demand.

The cross-price elasticity of the demand for gasoline-powered cars with respect to the prices of gasoline is -0.71. Suppose that the price of gasoline increases from 2 to 2.10 euros per liter. How would that affect the demand for gasoline-powered cars?

Microsoft offers Office 365 Education at no charge to educators and students at eligible institutions. Explain how this free service affects the own-price elasticity of demand for Office 365 when the students graduate.

Americans consume 126 grams of sugar per day. Suppose that a sugar tax raises the retail price of sugar from US$2.79 to US$3.39 per pound, and reduces consumption to 120 grams per day. Calculate the own-price elasticity of demand.

Suppose that the advertising elasticity of the demand for an entertainment channel is 1.3. If the producer raises advertising expenditure by 5%, how would that affect the demand?

Changes in the price of an item may affect the income elasticity of demand.

The cross-price elasticity of the demand for gasoline-powered cars with respect to the prices of gasoline is -0.71. Suppose that the price of gasoline increases from 2 to 2.10 euros per liter. How would that affect the demand for gasoline-powered cars?

The own-price elasticity of the demand for Luna's product is -0.8. Explain how a 10% price increase would affect the company's revenue.

At the ParkNShop online store, the price of 8kg pack of premium Thai fragrant rice is HK$107.90. Which bias in consumer thinking explains why ParkNShop did not price the rice at HK$108?

The own-price elasticity of the demand for water among urban residential users is -0.20 in summer and -0.06 in winter. Compare the elasticities by season.