A small countertop installing company hires you to estimate their consumers weekly demand function for marble (per sq ft). The demand function is as follows: Qm = 5000-30Pm + 20Pg + 0.05Inc m= marble, g= granite and inc= average disposable income for home improvements in the surrounding area. Current prices: marble=40, granite=25 and disposable income-5000 Suppose during the supply change shortage the price of marble triples to $120. Determine the elasticity of demand at the new market price for marble. Answer is -1.67. Please explain how to get to this answer

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A small countertop
installing
company hires you to estimate
their consumers weekly demand
function for marble (per sq ft). The
demand function is as follows:
Qm = 5000-30Pm + 20Pg +
0.05Inc m= marble, g= granite
and inc= average disposable
income for home improvements
in the surrounding area. Current
prices: marble=40, granite=25
and disposable income-5000
Suppose during the supply
change shortage the price of
marble triples to $120. Determine
the elasticity of demand at the
new market price for marble.
Answer is -1.67. Please explain
how to get to this answer
Transcribed Image Text:A small countertop installing company hires you to estimate their consumers weekly demand function for marble (per sq ft). The demand function is as follows: Qm = 5000-30Pm + 20Pg + 0.05Inc m= marble, g= granite and inc= average disposable income for home improvements in the surrounding area. Current prices: marble=40, granite=25 and disposable income-5000 Suppose during the supply change shortage the price of marble triples to $120. Determine the elasticity of demand at the new market price for marble. Answer is -1.67. Please explain how to get to this answer
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