February 2016
Beginner to intermediate
500 pages
33h 40m
English
Content preview from Managerial Economics and Strategy, 2/eBecome an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
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Questions
All exercises are available on MyEconLab; * [&|eq|&] answer at the back of this book; C [&|eq|&] use of calculus may be necessary.
1. Elasticity
1.1 The U.S. Tobacco Settlement between the major tobacco companies and 46 states caused the price of cigarettes to jump 45¢ (21%) in November 1998. Levy and Meara (2005) found only a 2.65% drop in prenatal smoking 15 months later. What is the elasticity of demand for this group?
1.2 When Apple raised the price of iTunes from 99¢ to $1.29, GS Boyz’s “Stanky Legg” sales dropped from 22,686 units to 19,692 units (Glenn Peoples, “iTunes Price Change: Sales Down, Revenue Up in Week 1,” Billboard, April 15, 2009). What was the song’s arc elasticity of demand? (Hint: See Q&A 3.1 .)
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