Answered: looking for help finding the elasticity…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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looking for help finding the elasticity of this problem, and if it would be considered Unit elastic, price quasi-elastic, price inelastic, or price elastic. Thank you!

The following demand and supply functions for hair cuts will be used for questions 1-4.

Q^D=300-6P

Q^S=2P-20

Where P is in dollars and Q is the number of hair cuts.

Calculate equilibrium price and quantity and the price elasticity of demand at equilibrium.

P* = 40 $

Q* = 60 hair cuts

E^D=

Expert Solution

Step 1

$Q^{D} = 300 - 6 P Q^{S} = 2 P - 20$

Find:

1) Equilibrium Price and Quantity.

2) Price elasticity of demand at equilibrium when P* is $40 and Q* is 60 hair cuts.

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