Project #10846 - Microeconomics

Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.

You just opened a flower shop and are trying to understand pricing issues. You were told that elasticities are very important in determining prices and what products to supply, so you decide to investigate this concept.

You call your friend, an economics professor, and ask, "What is the price elasticity of demand? What determines it? What is elastic and inelastic demand?"

To really understand it, compute the following price elasticities of demand:

• The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded.
• The price of a pack of cigarettes increases by 10% and there is a 5% drop in the quantity demanded.
• The price of water increases by 15% but there is no drop in the quantity demanded.

Of the above examples, which is more elastic, and which is the least elastic? Why? Answer the following questions:

• Why is elasticity an important concept for a business? What if national income went up? How would that affect elasticity?
• What is the price elasticity of supply? What determines it?
• Compute the following price elasticities of supply:
• The price of a hotel room increases by 20%, and the quantity supplied increases by 10%.
• The price of health care goes up by 50% , and the quantity supplied increases by an equal amount.
• The price of a book increases by 10%, and the quantity supplied increases 20%.
• In the above examples, which is more elastic and which is the least elastic? Why?
• What kind of supply and demand elasticities would the following goods have, and why?
• Bridge tolls
• Beachfront properties
• Gourmet coffee
• Luxury automobiles
• Gasoline
• Cell phones
• Computers
• College tuition

Now that you are an expert on elasticities, what do you think would be the best time of year to raise prices, and why? What do you think the elasticities are in the flower business? Use graphs and hypothetical tables to support your answer. Please submit your assignment.

This is the format is to go. APA with ref.

Paper Title Goes Here

Write your introduction here. Write a brief paragraph that introduces the reader to your topic and it should explain what your paper will be discussing. Much of your introduction may be taken from the assignment itself (in your own words). You will want to review the assignment AND rubric for full details and you will need to update the Title Page/Page Header.

Write 800-1200 words (word count does not include the section headings below).  For assistance with your assignment, please use your text, Web resources, and all course materials

Price Elasticities of Demand

Part 1

The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded.

Part 2

The price of a pack of cigarettes increases by 10% and there is a 5% drop in the quantity demanded.

Part 3

The price of water increases by 15% but there is no drop in the quantity demanded.

Part 4

Of the above examples, which is more elastic, and which is the least elastic? Why?

Part 5

Why is elasticity an important concept for a business? What if national income went up? How would that affect elasticity?

Part 6

What is the price elasticity of supply? What determines it?

Price Elasticities of Supply

Part 1

The price of a hotel room increases by 20%, and the quantity supplied increases by 10%.

Part 2

The price of health care goes up by 50% , and the quantity supplied increases by an equal amount.

Part 3

The price of a book increases by 10%, and the quantity supplied increases 20%.

Part 4

In the above examples, which is more elastic and which is the least elastic? Why?

Part 5

What kind of supply and demand elasticities would the following goods have, and why?

Bridge tolls

Beachfront properties

Gourmet coffee

Luxury automobiles

Gasoline

Cell phones

Computers

College tuition

Flower Business

Now that you are an expert on elasticities, what do you think would be the best time of year to raise prices, and why? What do you think the elasticities are in the flower business? Use graphs and hypothetical tables to support your answer.

References

List your reference here. The reference page must include all of the references you used, listed in proper APA format. Refer to the Citations.doc post in files area.

 Subject Business Due By (Pacific Time) 08/16/2013 01:00 am
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