When the price of spicy sauce was $10dollar sign, 10, people bought 100 jars. When the price increased to $12dollar sign, 12, pe
1 answer:
Answer:
Price elasticity of demand = 0.33%
Explanation:
A price elasticity of demand can be defined as a measure of the responsiveness of the quantity of a product demanded with respect to a change in price of the product, all things being equal.
Mathematically, the price elasticity of demand is given by the formula;
<u>Given the following data;</u>
Old price = $10
New price = $12
Old quantity demanded = 100
New quantity demanded = 40
To find the price elasticity of demand, we would determine the percentage change in price and demand.
<em>Percentage change in price = 20%</em>
<em>Percentage change in demand = 60%</em>
Now, we can find the price elasticity of demand;
Substituting into the equation, we have;
<em>Price elasticity of demand = 0.33%</em>
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Answer:
500
Explanation:
please find attached the table referred to in this question and a second table where marginal cost is included
A perfect competition is characterised by many buyers and sellers of homogeneous goods and services. Market prices are set by the forces of demand and supply.
in a perfect competition, price = marginal cost = marginal revenue
Marginal cost = total cost 2 - total cost 1
e.g. marginal cost at 2 units of output = $7 - $2 = $5
Hank and Helen would supply at the point where marginal cost is equal to $5.
looking at the second attached table, there are two points where marginal cost is equal to $5. at output 1 and output 5.
at output one, Hank and Helen would be earning a loss because total cost is greater than total revenue. so they would not supply at this point.
at output five, Hank and Helen would earn a profit and thus would supply at 5 units of output.
Since all firms face and identical cost structure, the industry supply would be 100 x 5 = 500 pounds
