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=

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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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