In What Price Range is the Demand for Homes Relatively Inelastic?

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A company buying advertising during the Super Bowl

 

SKU: Eco1937482

ECONOMICS QUESTIONS:

1. The California State University System has raised its fees by 10%. Would the demand for these universities (such as San Diego State University or CSU – San Marcos) be relative elastic or inelastic? Use the three factors to explain why.

 

2. In 2006, the fees at community colleges will fall from $26 to $24 per unit. Is the demand for community college courses relatively elastic or relatively inelastic? Use the three factors to explain why. Based on your answer, what will happen to the revenues of community colleges?

 

3. The Post Office raised the price of a first-class stamp from 37 cents to 39 cents. In this range, is the demand to send a first class letter relatively elastic or relatively inelastic? Why?

 

4. In each case, state whether you believe the demand for the product is relatively elastic or relatively inelastic?

Then, provide reasons for your conclusion.

a. A company buying advertising during the Super Bowl

b. Wheat used to make bread and flour

c. Services of a dentist to bleach teeth to make them very white

d. A new automobile when the interest rate to borrow money to buy the automobile goes to zero

e. Use of cigarettes when the state of California raised the cigarette tax by $1.10

f. Buying gasoline when the price rose from $2.00 to $3.00 per gallon

g. Electricity when the prices tripled in just a few months

 

5. You were given the following demand curve for homes:

Price Quantity Demanded Total Revenue

$340,000 0

1 $320,000 1000

2 $300,000 2000

3 $280,000 3000

4 $260,000 4000

5 $240,000 5000

6 $220,000 6000

7 $200,000 7000

8 $180,000 8000

9 $160,000 9000

10 $140,000 10000

Fill in the table to calculate the total revenue. In doing so, ignore the three zeros on the price and ththree zeros

on the quantity demanded. Your result will be in millions of dollars.

In what price range is the demand for homes relatively inelastic?_______________

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In what price range is the demand for homes relatively elastic?_______________

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In what price range is the demand for homes unit elastic?_______________

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