Question

5. Guillermo is looking to purchase a new vehicle as his income has increased from $2,000 per month to $3,000 per month, so his purchase increases from 0 to 1 vehicle. He see’s a new Mercedes Benz that decreased its price from $45,000 to $42,000. What is Guillermo’s price elasticity of demand for a Mercedes Benz vehicle? What is his income elasticity? Is a Mercedes Benz a normal or inferior good?

6. Dell has gone through some market challenges these past few years, especially with the desktop market. If the prices of desktop computers decreases by 10% last quarter resulting in an increase of 15% in quantity demanded, then Dell will decrease the quantity supplied of desktops by 20%. What is the price elasticity of supply for Dell desktops?

7. The price of cell phones rose slightly higher from $800.00 to $950.00 this past month, and Samsung found out about Apple’s release of the iPhone 11, so in turn it decided to increase production of its Note 20 from 350,000 to 500,000 to compete with its rival. What is the price elasticity of supply for Samsung Note 20 phones?

Answer 1

Answer:

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