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:

Lead Time

The total time taken from the initiation of a process or order until its completion or delivery.

Fixed-Period Inventory System

An inventory control system where orders are made at fixed intervals, but the order quantity varies based on demand.

Safety Stock

Additional inventory held to guard against stockouts, ensuring that a sufficient quantity of goods is available to meet demand fluctuations.

Review Period

The time interval between evaluations or assessments of a project, process, or system to ensure it meets its objectives and to identify necessary adjustments.