# You are working trying to estimate the proper price to charge

Question # 00848334 Posted By: wildcraft Updated on: 12/05/2023 11:26 PM Due on: 12/06/2023
Subject Economics Topic General Economics Tutorials:
Question

You are working trying to estimate the proper price to charge a market for the firm that sells beer in Lancaster Pennsylvania. They estimated that the demand curve for the market is Quantity demanded=20-2P. The firm currently prices the good at 8 dollars. They want to move the price to 6 dollars in a attempt to increase profits.This question is worth 5 points (please show work for full credit)

1) What is the elasticity for this move in price (Use the midpoint method for elasticity) make sure you show your work? (1.5)

2) Now you are contacted by a different branch of this company that is in a lower priced (Scranton P.A.) market with the same demand curve. They want to move the price from 2 to 5 dollars. What is the elasticity of this change (Use the midpoint method)?(1.5)

3) Now suppose you find out that there is a similar product that impacts the Quantity demanded for a product. The relationship is Qd=15+Pb. Now suppose the price (Pb) of the other good is 5 and goes to 6. What is the Cross-price elasticity of the good? what type of relationship is this (complement or substitute) (2)

Tutorials for this Question
1. ## Solution: You are working trying to estimate the proper price to charge

Tutorial # 00843797 Posted By: wildcraft Posted on: 12/05/2023 11:27 PM
Puchased By: 2
Tutorial Preview
The solution of You are working trying to estimate the proper price to charge...
Attachments
You_are_working_trying_to_estimate_the_proper_price_to_charge.ZIP (18.96 KB)

Great! We have found the solution of this question!