In addition to the question pictured: 1). The price elasticity of demand for Pac
ID: 2440059 • Letter: I
Question
In addition to the question pictured:1). The price elasticity of demand for Pace University for the fall of 2006 is [?]
2). The demand for Pace’s freshman class is price [?]
Homework: Homework 4 Score: 0 of 2 pts End of Chapter 1.8 5 of 15 (10 complete) HW Score: 58.33%, 17.5 of 30 pts ! Question Help * In fall 2006, Pace University in New York raised its annual tuition from $24.400 to $29,750. Freshman enrollment declined from 1,450 in fall 2005 to 1,150 in fall 2006 Assuming that the demand curve for places in the freshmen class at Pace did not shift between 2005 and 2006, use this information to calculate the y of demand Use the midpoint formula in your calculation. Source: Karen W. Arenson, "At Universities, Plum Post at Top Is Now Shaky" New York Times, January 9, 2007 The price elasticity of demand for Pace University for the fall of 2006is(Hint include the negative sign and enter your response rounded to two decimal places) Enter your answer in the answer box and then click Check Answer 4 1 Clear Al remaining
Explanation / Answer
Q1)
Price elasticity of demand (mid-point method) = [(Q2 – Q1) / {(Q1 + Q2) / 2}}] / [(P2 – P1) / {(P1 + P2) / 2}]
= [(1150 – 1450) / {(1450 + 1150) / 2}] / [(29,750 – 24,400) / {(24,400 + 29,750) / 2}]
= [-300 / 1,300] / [5,350 / 27,075]
= -0.2307 / 0.1975
= - 1.17 (Answer)
Q2) Answer: elastic
This is price elastic, since the elasticity is more than 1 (by ignoring the negative sign).
Q3) TR in 2005 = Quantity in 2005 × Price in 2005
= 1450 × $24,400
= $35,380,000 (Answer)
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