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Managerial Economics & Quantitative Analysis Assignment

Question #1)

Prior to a price increase, the price and quantity demanded for a product were $10 and 100, respectively. After the price increase, they were $12 and 90.

a) Calculate the arc elasticity of demand.
b) Is the demand elastic or inelastic over this region?
c) What happened to total revenue?

Question #2

In 1991, Rochester, New York, had a serious ice storm. Electric power was out in houses for days. The demand for power generators increased dramatically. Yet the local merchants did not increase their prices, even though they could have sold the units for substantially higher prices. Why do you think the merchants adopted this policy?

Question #3

Is it possible to raise the tax on gasoline to improve the long-term efficiency of the economy?
Focus: Applying the economic theory of consumer behavior to evaluate the appropriateness and effectiveness of raising the tax on gasoline to improve the status of the US economy.
Read the following article from the New York Times online

???How would raising the tax on gasoline impact US consumer patterns for automobiles and related transportation issues. Would such a tax have the potential for encouraging more clean-power technology and the more efficient use of resources? Can it be useful in reducing the country’s dependence on foreign oil, and other related issues?

b) Analyze and create a graph on the elasticity of demand for transportation in the long-run and short-run and advise how effective the tax will be? Would this be a fair tax? Why has such a tax change not been implemented in the past?

of the US economy.
Read the following article from the New York Times online

???How would raising the tax on gasoline impact US consumer patterns for automobiles and…