Consider the following demand function for good 'X':Q = 9-0.1p, - Py + 0.01p, + 0.001Y, wherePrice of a related good, P= $3Price of a related good, P, = $275Own price, P,= $30Quantity demanded = 35.75Consumer income, Y = $30,000The income elasticity of demand, E, when eguilibrium quantity is 35.75 units and income is $30,000 is equal to. (Enter a numeric response using a real numberrounded to three decimal places.)O etvMacBook AirDIIDD80F10F7F8F4F5F2F3EI$%&!@79134QWERTYDFHJKACVNMcommandtioncommand.. .-V -* 00* :

Income elasticity of demand depicts how much consumer responds with the change in his income.

Answered: Consider the following demand function…

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 demand is linear: Qd=a-bP We know that the price elasticity of demand is -0.5, quantity of demand Qd=100, price P=10, then: a=200,b=10 a=200, b=-10 a=150, b=5 a=50, b=-5
Consider the following demand function Qd=1000-4P2+6P*+5Y which describes how the demand Qd for a good depends on its price, P, the price P*of another good and income Y. Calculate the own-price elasticity, the cross price elasticity and income elasticity when P=10, P*=20 and Y=1000. Is demand elastic or inelastic? Are the goods complements or substitutes? Is demand normal?
The demand for hamburgers is given by Qd=10-p and the supply is Qs=4p-10, where pd and ps are, respectively the price paid by demanders and the price received by suppliers. A: Draw the demand and supply functions. What is the price-elasticity of demand? What is the price-elasticity of supply? B: Find the equilibrium quantity and price, and show them on the graph. C: Suppose due to the rising health awareness the demand decreases to Q d=5-p. Find the new equilibrium prices and quantity, and show them on the graph. D: Suppose that the demand and supply are as before, i.e. Qd=10-p and Qs=4p-10, but now the government imposes a quantity tax on the suppler at the rate of 1 per unit of the quantity. What quantity will be sold and what price? E: In part d), what is the total amount of tax collected by the government? How this tax amount is divided between the demanders and supplier? Who pays more and why? Explain
In a particular market, demand and supply curves are defined by the following equations: P=50 – 0.5QD QS= -20 + 2P where, P is the price in pounds, QS is the quantity supplied and QD is the quantity demanded. 1. What is the equilibrium price and quantity? 2. What is the price elasticity at a price of £35? 3. What do you expect will happen to total expenditure on this good if the price increases from £35 to £40? Is this expectation confirmed if you calculate the total revenue for each price?
Which of the following statements about the price elasticity of demand is correct? Other things equal, if good x has close substitutes and good y does not have close substitutes, then the demand for good x will be more elastic than the demand for good y. Price elasticity of demand reflects the many economic, psychological, and social forces that shape consumer tastes. The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases. All of the above are correct.
The demand for Widgets (QX) is a function of the price of widgets (PX), the price of woozles (PY), and per capita income (1): QX = 1950 - 10 PX + 5 PY-0.11 Currently, PX = 25, PY = 10, and 1 = 15,000. (a) Calculate the elasticity of demand for widgets with respect to its own I price, the price of woozles, and income. (b) Over what range of prices is the demand for widgets elastic? (c) If the cost per widget is 10 and the manufacturer behaves as a monopolist, how many widgets will be sold and at what price: (d) By how much must the price of widgets change if there is a 1% decrease in per capita income and the goal is to keep QX constant.
suppose the demand curve for a product is given by Q=10-2P+Ps1,where P is the price of the product and Ps is the price of a substitute good. the price of the substitute good is $2.00. a)suppose P=$1.00, what is the price elasticity of demand?what is the cross- price elasticity of demand? b)suppose the price of the good, P, increases to $2.00. Now what is the price elasticity of demand, and what is the cross-prices elasticity of demand?
The extended demand function of good X is: QDX = 1400 20 PX - 10 PY + 0.1 M where: QDX = quantity demanded of good X PX Price of good X PY = Price of related good Y (related in consumption to good X) M = Average consumer income. Fix the following variables: PX = 50 M = 10,000 Assume: PY changes from $50 to $80 What is the cross-price elasticity of the demand of good X with respect to PY [Use the arc elasticity formula.] a. -0.69 b. C. d. -0.87 Based on your answer to the previous question, goods X and Y are: b. 0.69 a. inelastic C. 0.87 d. complements inferior substitutes
Given the demand function Qx= 97.7-2.5Px+3.1Py-2.1Qx, is the quantity demanded, Px is the price of the good itself in dollars, Py is the price of a related good in dollars, and Y is average income. If Px=$24.8, Py=$29, Y=$36, what is the point or own price elasticity of demand?

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