Economic Problems??

Question

Can someone please help me with this economics questions:

1.Charles loves Mello Yello and will spend $10 per week on the product no matter what the price. What is his price elasticity of demand for Mello Yello??

2. The energizer bunny that "keeps going and going" had been a very successful ad campaing for batteries. What is the relationship with this slogan and the firms price elasticity of demand and total revenue???

Thanks a lot for those who helped.

Answer 1

Question 1, your price elasticity is 1. Since you will always spend the same amount of money on the product, regardless of the price, the volume of the product purchased will increase or decrease in the same proportion as the price.

Question 2, unclear. If by "successful ad campaign" you mean that the slogan increased customer loyalty, that probably means that it increased the price inelasticity of consumers. that is to say that consumers will be willing to continue to purchase the same volume of energizer batteries even if the price increases.

Answer 2

1) Reinstate the Glass Stegal Banking act that the republican congress repealed in 1998. 2) Admit that unregulated markets coupled with no capital gains tax is a recipe for disaster. 3) Finally admit that "rational self- interest" is another way to say "greed is good". 4) Admit that Adam Smith is right after over 200 years and that you cannot have a healthy economy and eliminate manufacturing jobs. 5) Admit that we cannot buy more than we sell and not suffer the consequences. Realize that labor unions are good. Germany"s labor unions actually have voting members on corporate boards of directors and Germany exports more than China does. 4) Eliminate the exotic ways to leverage debt instruments.

Answer 3

1) 0
Elasticity of Demand (Ed)= [ (Q2-Q1) / ((Q1+Q2)/2) ] / [ (P2-P1) / ((P1+P2)/2) ]

2) The ad campaign is designed to separate Substitute goods and maintain the of demand for Energizer batteries even if the price increases. Thus the inelasticity of demand increases revenues because of higher prices.