The mid points variation of the arc own price elasticity

The mid points variation of the arc own price elasticity of demand formula is as follows:h = – [(Q1 – Q0) / (Q0 + Q1)] X [(P0 + P1) / (P1 – P0)] where (P0, Q0) and (P1, Q1) are two price – quantity demanded combinations.Show all work.1. The own price elasticity of demand for gasoline is estimated to be 0.6.a. Classify the demand as elastic, inelastic or unit elastic.b. Predict the percentage change in quantity demanded if price increases by 40%.2. The own price elasticity of demand for sporting goods is estimated to be 2.4.a. Classify the demand as elastic, inelastic or unit elastic.b. Predict the percentage change in quantity demanded if price decreases by 15%.3. The own price elasticity of demand for public transportation is estimated to be 0.4.a. Classify the demand as elastic, inelastic or unit elastic.b. Determine the percentage change in price required to increase the quantity demanded of public transportation by 12%.4. Suppose that two price-quantity demanded combinations for some product are ($1.20, 90 units) and ($0.80, 110 units). Using the mid points variation of the arc own price elasticity of demand formula, calculate the coefficient of elasticity for both a price increase and a price decrease. Show all work.5. The following table represents the demand schedule for museum admissions in a small city:Price (per visit per person) Quantity Demanded (thousands of person visits per year) A $10 2 B 8 4 C 6 6 D 4 8 E 2 10 a. What is the shape of the corresponding demand curve – linear or non linear?b. Using the mid points variation of the arc own price elasticity of demand formula, calculate the coefficient of elasticity between combinations A and B, B and C, C and D, and D and E. Show all work. For each calculated coefficient of elasticity, classify the demand as elastic, inelastic or unit elastic.c. What is the change in the value of the coefficient of elasticity as price decreases – increases, decreases, or no change? Does demand become more inelastic or more elastic?d. What is the explanation for the change in the coefficient of elasticity as price decreases?e. For each combination, calculate total revenue (TR) = P X Q.f. Between what two combinations is total revenue the greatest?6. If the demand for a product is inelastic, buyers do not reduce their purchases at all as price changes.” Evaluate this statement.7. Suppose there is an increase in the supply of a product. Rank the following own price elasticity of demand classifications with respect to the largest effect on price and the smallest effect on quantity: perfectly (infinitely) elastic, elastic, inelastic, unit elastic, or perfectly (infinitely) inelastic. Diagrams may be useful.8. Suppose there is a decrease in the supply of a product. Rank the following own price elasticities of demand with respect to the smallest effect on price and the largest effect on quantity: 2.3, 0.36, 1.0. Diagrams may be useful.9. A consultant estimates the price elasticity of demand for a particular brand of shoes to be 3.5. The company is planning to reduce the price of the brand by 10%. Determine the direction of the change in the company’s total revenue, total costs and profits if price decreases by 10% .10. If the own price elasticity of demand for beer is approximately unity, what would be the direction of the change in total revenue, total cost and profits of a very small increase in price.11. The own price elasticity of demand for cigarettes is 0.5. Suppose all of thecigarette manufacturers colluded to raise prices by 20%. Predict the direction of the change in total revenue, total costs and profits of all companies combined if price were to increase.12. For each of the following pairs of products determine which product is more own price elastic in demand. Identify the price elasticity of demand determinant involved and explain the reason.a. Luxury cars, BMW5 seriesb. Coca Cola, beveragesc. green beans, clothingd. chewing gum, furnituree. Christmas toys at Thanksgiving time, Christmas toys on Christmas Evef. washing machine, clothing