1. Supply and Demand, Elasticity Consider the market for butter. The demand curve is given by Q° = a+ b x P + c x 1, where I is the average income and Pis the price of butter. The supply curve is Q° = d xP+ e x Pm + f. where Pm is the price of milk. At above: a=250, b=-2, c=4, d=6, e= -20, and f= -20. 1. If I= 20 and Pm=2. What is the equilibrium quantity (no need of price)? It is 2. Suppose, currently, P=120,1 = 20, and Pm=10. What is the income elasticity of demand at the current income level of 1? It is 3. Suppose, currentiy. P=120, 1 = 20, and Pm=10. What is the cross-price elasticity of suppy at the current income price of Pm? It is 4. Suppose, currently, P-120, 1 = 20, and Pm=10. What is the price elasticity of supply at the current income level of P? It is

1. Supply and Demand, Elasticity Consider the market for butter. The demand curve is given by Q° = a+ b x P + c x 1, where I is the average income and Pis the price of butter. The supply curve is Q° = d xP+ e x Pm + f. where Pm is the price of milk. At above: a=250, b=-2, c=4, d=6, e= -20, and f= -20. 1. If I= 20 and Pm=2. What is the equilibrium quantity (no need of price)? It is 2. Suppose, currently, P=120,1 = 20, and Pm=10. What is the income elasticity of demand at the current income level of 1? It is 3. Suppose, currentiy. P=120, 1 = 20, and Pm=10. What is the cross-price elasticity of suppy at the current income price of Pm? It is 4. Suppose, currently, P-120, 1 = 20, and Pm=10. What is the price elasticity of supply at the current income level of P? It is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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