This is a Microeconomics class
You just opened a flower shop and are trying to understand pricing issues. You were told that elasticities are very important in determining ;prices and what products to supply, so you decide to investigate this concept.
You call your friend, ;an economics professor, and ask, “What is the price elasticity of demand? What determines it? What is elastic and inelastic demand?”
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To really understand it, compute the following price elasticities of demand:
- The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded.
- The price of a pack of cigarettes increases by 10% and there is a 5% drop in the quantity demanded.
Of ;the above examples, which is more elastic, and ;which is the least elastic? Why? Answer the following questions:
- Why is elasticity an important concept ;for a business? ;
- Bridge tolls
- Beachfront properties
- Gourmet coffee
- Gasoline
- Cell phones
Now that you are an expert on elasticities, what do you think would be the best time of year to raise prices of flowers, and why? ;
What do you think the elasticities are in the flower business?
Please submit your assignment.
For assistance with your assignment, please use your text, Web resources, and all course materials.