2. Suppose Qd=10,000 -2 Px + 3 Px-4.5M, = where Px $100, P = $50, and M (income) = $2,000. (a) What is the own price elasticity of demand? Please show your calculations. (b) What is the cross price elasticity between good X and good Y? Please show your calculations. (c) What is the income elasticity of demand? Please show your calculations. Hint: For this question please look at the section "Obtaining Elasticities from Demand Functions" in Chapter 3 on pages 89-90 of the textbook

2. Suppose Qd=10,000 -2 Px + 3 Px-4.5M, = where Px $100, P = $50, and M (income) = $2,000. (a) What is the own price elasticity of demand? Please show your calculations. (b) What is the cross price elasticity between good X and good Y? Please show your calculations. (c) What is the income elasticity of demand? Please show your calculations. Hint: For this question please look at the section "Obtaining Elasticities from Demand Functions" in Chapter 3 on pages 89-90 of the textbook

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

2.
Suppose Qd 10,000-2 Px +3 Px-4.5M,
=
where Px $100, Px = $50, and M (income) = $2,000.
What is the own price elasticity of demand? Please show your calculations.
(b) What is the cross price elasticity between good X and good Y? Please show your
calculations.
(c) What is the income elasticity of demand? Please show your calculations.
Hint: For this question please look at the section "Obtaining Elasticities from Demand
Functions" in Chapter 3 on pages 89-90 of the textbook

Suppose = 10,000-2P + 3P -4.5M, where P = $100, P = $50, and M (income) = $2,000. (a) What is the own
x
x
y
price elasticity of demand? Please show your calculations. (b) What is the cross price elasticity between good x and good Y?
Please show your calculations. (c) What is the income elasticity of demand? Please show your calculations. Hint: For this question
please look at the section "Obtaining Elasticities from Demand Functions" in Chapter 3 on pages 89 - 90 of the textbook
2.
Suppose Qd=10,000-2 Px +3 Px-4.5M,
where Px $100, Px = $50, and M (income) = $2,000.
(a) What is the own price elasticity of demand? Please show your calculations.
(b) What is the cross price elasticity between good X and good Y? Please show your
calculations.
(c) What is the income elasticity of demand? Please show your calculations.
Hint: For this question please look at the section "Obtaining Elasticities from Demand
Functions" in Chapter 3 on pages 89-90 of the textbook

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11.) In the market for cars, the price elasticity of supply is +1.5, and the price elasticity ofdemand is -0.8. The equilibrium price is $ 30 thousand, and quantity is 120 million.(a) Assuming supply and demand are linear, reconstruct and draw the supply and demandcurves. Label the intercepts.(b) To reduce traffic, the government imposes a $400 tax on cars. What are PB and PS after thetax? What is the new equilibrium quantity? Illustrate them on the same graph.(c) How big is the change in consumer surplus, producer surplus, government revenue, anddeadweight loss?
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6) Your income rises from $2,000a year to $10,000 and your purchases of beer change from 10 to 40. What number below most closely approximates your income elasticity over this range? A) 1 B) 1.25 C) 0.75 D) 0.25
Please help with following question Suppose the own price elasticity of demand for good X is -4, its income elasticity is 2, its advertising elasticity is 3, and the cross price elasticity of demand between it and good Y is -6. Determine how much the consumption of this good will change if: The price of good X increases by 10%. The price of good Y decreases by 5%. Advertising increases by 14%. Income decreases by 8%. thanks
Solve all questions compulsory.....
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Point on Demand Curve: A B C D E F G H I Price (P): $40 $35 $30 $25 $20 $15 $10 $5 $0 Quantity Demanded (QD): 0 5 10 15 20 25 30 35 40 b) Calculate the price elasticity of demand between each set of points on the demand curve (i.e., between A and B, B and C, C and D, D and E, etc.) (c) explain how and why the price elasticity of demand changes as you move along this demand curve. how and why the effect of price changes on total revenue is tied to elasticity.
Price (dollars) 8 7 D. 5 10 15 20 25 30 35 Quantity (units per year) In the figure above, when the price falls from $8 to $7, total revenue A) decreases from $210 to $120 so demand is inelastic. B) increases from $120 to $210 so demand is inelastic. C) decreases from $210 to $120 so demand is elastic. D) increases from $120 to $210 so demand is elastic. 6
3. Suppose a 10% increase I price of a different product (such y), has resulted in a 30% decrease in the demand for OUR product (say, product X). What can you tell about cross elasticity of demand? (Calculate and demonstrate your answer). Are x and y substitutes or complement? Why?
16.) Suppose that a demand curve passes through the points (4,$4.00) and (8,$2.00). What is the price elasticity of demand measured between these two points? а.) -1 b.) 1 c.) -2 d.) 2 17.) Which of the following goods would you expect to have the highest price elasticity of demand? a.) Diamonds b.) Pretzels c.) Rice d.) Tap water
5. If the price elasticity of demand for a good is 1.5, we would say that its demand is a)inelastic b)elastic c)increasing d)normal
Suppose the own price elasticity of demand for good X is -3, its income elasticity is 1, its advertising elasticity is 2, and the cross-price elasticity of demand between it and good Yis -4. Determine how much the consumption of this good will change if: Instructions: Enter your responses as percentages. If you are entering a negative number, be sure to use a (-) sign. a. The price of good X decreases by 5 percent. percent b. The price of good Yincreases by 10 percent. percent c. Advertising decreases by 3 percent. percent d. Income increases by 4 percent. 4 percent