13 May WHAT WOULD HAPPEN TO REVENUES IF PRICES WERE RAISED WHEN DEMAND WAS ELASTIC?
Econcomics
1. What
real-world examples of the Law of Diminishing Returns do you have to share? Why
this ‘law’ is also referred to as the “flowerpot law?”
2. All
demand curves have an elastic range, an inelastic range, and a point where
elasticity = 1. As you move up the demand curve elasticity increases. The
following graph, which is also attached, shows how elasticity changes as you
move up and down the demand curve.
For example, take the price of gasoline, at current prices
gasoline is relatively inelastic. But what would happen if the price of
gasoline rose to $5, $6, or $7 a gallon?
At what price do you think the quantity demanded of gasoline
would move into a range where its elasticity of demand would become elastic?
3. What
would happen to revenues if prices were lowered when demand was inelastic? Does
anyone have any real-world examples? What would happen to revenues if prices
were raised when demand was elastic? Does anyone have any real-world examples?
4. What
questions or comments do you have on the determinant of the price elasticity of
demand referred to as substitutability? What are some goods/services that are
substitutes for the goods/services produced by your workplace? How would the
availability of substitutes affect the price elasticity of demand for a good or
service?Econcomics1. What
real-world examples of the Law of Diminishing Returns do you have to share? Why
this ‘law’ is also referred to as the “flowerpot law?”2. All
demand curves have an elastic range, an inelastic range, and a point where
elasticity = 1. As you move up the demand curve elasticity increases. The
following graph, which is also attached, shows how elasticity changes as you
move up and down the demand curve.For example, take the price of gasoline, at current prices
gasoline is relatively inelastic. But what would happen if the price of
gasoline rose to $5, $6, or $7 a gallon?At what price do you think the quantity demanded of gasoline
would move into a range where its elasticity of demand would become elastic?3. What
would happen to revenues if prices were lowered when demand was inelastic? Does
anyone have any real-world examples? What would happen to revenues if prices
were raised when demand was elastic? Does anyone have any real-world examples?4. What
questions or comments do you have on the determinant of the price elasticity of
demand referred to as substitutability? What are some goods/services that are
substitutes for the goods/services produced by your workplace? How would the
availability of substitutes affect the price elasticity of demand for a good or
service?
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