Brandon Wallace tutors economics students. He finds that when he charges $5 per hour, students demand a
total of 30 hours of tutoring per week; however, when he raises his rate to $8 per hour, they demand only
26 hours of tutoring.
a.Calculate the price elasticity of demand for Brandon’s tutoring.
b.Is demand for Brandon’s tutoring price elastic, unit elastic, or price inelastic? Which rate should he
charge to maximize his revenue?
c.Brandon finds that he can raise his rate to $10 per hour during the week before final exams and
students will continue to demand 26 hours of tutoring. Explain why this is so.
6. a.What effect will a tax on cigarettes have on the consumption of cigarettes and on the wallets of
smokers who are addicted to cigarettes?
b.What effect will a tax on cigarettes have on the decision of teenagers to smoke?
c.Describe the cross elasticity between cigarettes and the price of a Nicoderm patch, which is used to
fight the craving for nicotine.
7. The Grinch is now the mayor of your hometown, and he’s still trying to steal Christmas. On the day after
Thanksgiving, he announces a $25 tax on fresh Christmas trees. Tree farmers are angry to hear this because
they have already delivered this season’s freshly cut trees to the tree lots in your town. You hear your
neighbors planning to buy an artificial tree, and your family decides to drive to the next town to buy a tree.
a.Who will bear the biggest share of the burden the first Christmas season this tax is in effect? Why?
b.Will your answer change for subsequent Christmases? Why?
8. Using the concept of elasticity, show that a drug enforcement policy aimed at getting rid of heroin suppliers
may not be very effective in reducing heroin consumption.
9. Suppose that the price of gasoline doubles overnight. Why is the short-run price elasticity of demand for
gasoline different from the long run?
On January 1, Paisley, Inc., paid $560,000 for all of Skyler Corporation’s outstanding stock. This cash payment was based on a price of $180 per share for Skyler’s $100 p...Jul 21 2020
The following appear on a physician's intake form. Identify the level of measurement of the data.a)Allergiesb)Change in health (scale of -5 to 5)c)Heightd)Temperatur...Apr 23 2020
please answer this questionZhao Co. has fixed costs of $255,000. Its single product sells for $157 per unit, and variable costs are $107 per unit. Compute the level of sa...Mar 26 2020
What is the difference between a cored structure and macro segregation?May 19 2020
In my belief, Terminal Cash flow is the most difficult to estimate because it is highly sensitive to growth and WACC components. The other segments (initial investment an...Dec 03 2019
The assignment is a compulsory group assignment and is worth 20% of the total marks of the subject 2 The group should be comprised of four (4) students It is the respon...Mar 19 2020
Which group is responsible for the most instances of misconduct? Middle managers Senior managers First-line managers NonmanagersAug 21 2020
Air expands through a turbine opearating at steady state on aninstrumented test stand. At the inlet,p1 = 160 lbf/ in^2, T1= 1560 degree R, and the exit, p2= 14.8 lbf/in^2...Jun 04 2020
According to the Crown ATM Network the mean ATM withdrawal is PayEase Inc manufacturers a new model of ATM that allows one to pay bills electric water parking tickets a...Feb 15 2020
What work-life benefits are offered by small firms that are not available with large firms? If given a choice, would you rather work for a small or a large firm? Use spec...Dec 14 2019