Assume that the market demand for cheese is given by the function Qd=252-4P , and the supply is perfectly inelastic such that Qs=172, as farmers cannot change the quantity supplied of cheese in the short-run. Calculate the following: 1. The consumer surplus in the market for cheese. 2. The own-price elasticity of demand for cheese at the price of $40 per unit. 3. The reservation price of consumers, at the point where the elasticity of demand is equal to 0.189.
Assume that the market demand for cheese is given by the function Qd=252-4P , and the supply is perfectly inelastic such that Qs=172, as farmers cannot change the quantity supplied of cheese in the short-run. Calculate the following: 1. The consumer surplus in the market for cheese. 2. The own-price elasticity of demand for cheese at the price of $40 per unit. 3. The reservation price of consumers, at the point where the elasticity of demand is equal to 0.189.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume that the market demand for cheese is given by the function
Qd=252-4P , and the supply is perfectly inelastic such that Qs=172, as farmers cannot change the quantity supplied of cheese in the short-run. Calculate the following: 1. The consumer surplus in the market for cheese. 2. The own-price elasticity of demand for cheese at the price of $40 per unit. 3. The reservation price of consumers, at the point where the elasticity of demand is equal to 0.189.
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