The Makers of Academic Books Find That When They Raise

question 168

Essay

The makers of academic books find that when they raise the price of the average book from $50 to $75,quantity demanded among students drops from 100 to 90.Among casual readers,quantity demanded drops from 80 to 40.
a.Calculate the price elasticity of demand for each group.
b.Is demand price elastic or price inelastic for each group?
c.Using the determinants of demand,explain why there is a difference in elasticity for each group.

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Definitions:

Basic Accounting Equation

Assets equal liabilities plus equity; the foundational equation in accounting expressing the principle of balance in a firm's financial position.

Owner's Equity

The remaining value of a company's assets after all liabilities have been subtracted, indicating the stake of ownership in the enterprise.

Assets

Economic resources or owned valuables that are expected to provide future benefits to a business.

Liabilities

Economic obligations or debts that an entity is required to pay to another party.