2b please PROBLEM (1) The demand for good X is Qp = 60 - Px(1+ py) + 1? where p, is the price of the good X,Py is the price of a related good Y and I is the average income level.(a)Does the demand become more own-price elastic (at a given p,) as pP, increases?(b)Calculate the Income elasticity of demand at the point I = 10, Px = 10, py = 5PROBLEM (2) The demand and supply in a market are of constant elasticity form with elasticities equal to -1and 2, respectively. The market is in equilibrium at p=2 and Q-800.Derive the demand and supply equations.(a)(b) (BONUSWe learn that the demand in (a) was actually the sum of the (identical) demands of 800adults and that 700 adults have now left the economy. Calculate the new market equilibrium.

Equilibrium price and quantity:Price and quantity are in equilibrium at the point in the demand…

PROBLEM (2) The demand and supply in a market are of constant clasticity form with elasticities equal to -1 and 2, respectively. The market is in equilibrium at p-2 and Q-800. Derive the demand and supply equations. (b) (BONUS We learn that the demand in (a) was actually the sum of the (identical) demands of 800 adults and that 700 adults have now left the economy. Calculate the new market equilibrium.

PROBLEM (2) The demand and supply in a market are of constant clasticity form with elasticities equal to -1 and 2, respectively. The market is in equilibrium at p-2 and Q-800. Derive the demand and supply equations. (b) (BONUS We learn that the demand in (a) was actually the sum of the (identical) demands of 800 adults and that 700 adults have now left the economy. Calculate the new market equilibrium.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 1P

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