3. ElasticitiesFor all of the following questions, round your answer to the nearest hundredth.a. (Point Elasticity) Find the point elasticity of demand for a consumer with a demand forgasoline given by the function q = 80 - 10p - 2p² when the price is $5/gallon.b. (Arc Elasticity) Find the arc elasticity of gasoline demand when for a customer who uses 25gallons of gasoline per week when the price is $1.75 per gallon, and 30 gallons of gasoline perweek when the price is $1 per gallon. c. (Cross-Price Elasticity) Suppose your parents' home is heated by oil. When the price of oil is$6 per gallon, and the price of electricity is $0.04 per kilowatt hour (kWh), they use 2 gallons ofoil and 650 kWh of electricity, partially because they also use a plug-in space heater. When theprice of heating oil decreases to $5 per gallon, they increase thermostat on the oil heater and stopusing the plug-in space heater. As a result, they use 5 gallons of oil and 590 kWh of electricity.What is their cross-price elasticity for electricity with respect to heating oil?d. (Income Elasticity) Consider a two-person household in New York, NY that uses window airconditioning units to cool their apartment in the summer. Their monthly income is $8000 andthey use 139 kWh each August for air conditioning. One person gets laid off from their job, sotheir monthly income decreases to $5300. As a result, their air condition usage in Augustdecreases to 104 kWh. What is their income elasticity for electricity used for air conditioning?

Elasticity of demand can be defined as the responsiveness of the quantity demanded to the resulting…

Answered: a. (Point Elasticity) Find the point…

a. (Point Elasticity) Find the point elasticity of demand for a consumer with a demand for gasoline given by the function q = 80-10p2p² when the price is $5/gallon.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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