3. The supply and demand for product A at different price levels are given. Price Demand Supply 3 34 28 4 22 12 16 15 10 10 18 4 12 a) Find the demand function (Q=a-bP) and the supply function (Q=c+dP). Define the equilibrium price and quantity for this product. b) Calculate the price elasticity of demand as the price increases from $9 to $12 (use the midpoint method). c) Calculate the price elasticity of supply as the price decreases from $12 to $9 (use the midpoint method).

3. The supply and demand for product A at different price levels are given. Price Demand Supply 3 34 28 4 22 12 16 15 10 10 18 4 12 a) Find the demand function (Q=a-bP) and the supply function (Q=c+dP). Define the equilibrium price and quantity for this product. b) Calculate the price elasticity of demand as the price increases from $9 to $12 (use the midpoint method). c) Calculate the price elasticity of supply as the price decreases from $12 to $9 (use the midpoint method).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the supply and demand curves for a particular product are given by: QS = -20 + 2P QD =100 - 2P where QS and QD are quantities in units and P is the price per unit. (b) Calculate both the demand and supply elasticity around the equilibrium point. [Hint: you can use either the point method or the average arc (midpoint) method.] [5]
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