Answered: original: P= 50-2Q^0.5 TC= 10Q+5 new:…

original: P= 50-2Q^0.5 TC= 10Q+5 new: 60-2Q^0.6 TC= 10Q+5 1) find the back of envelope effect 2) fine the direct effect 3) explain it

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Economics
original: P= 50-2Q^0.5 TC= 10Q+5
new: 60-2Q^0.6 TC= 10Q+5
1) find the back of envelope effect
2) fine the direct effect
3) explain it
original: Q*=177.78 P*=23.33 pi*=2365.37
new: Q*=97.66 P*=28.75 pi*=1826.05

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Step 1: Define business economics

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Step 2: Find the back-of-envelope effect

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Step 3: Find the direct effect

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Step 4: Explain both the effects

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