Q3. Refer to the diagram. Using the midpoint formula, calculate the price elasticity of demandbetween the prices of $15 and $12. Accordingly, state whether demand is elastic or inelasticbetween these two points.P$/unit1512D1822Q (units/week)Ep =Damand ie ...Q4. For each case below, answer the bolded questioClassification of theCaseCalculationsproduct(s) if requested todo so1. Suppose that a 2% increase in income in the economydecreases the quantity of gadgets demanded by 1% ar everyE,=Gadgets arepossible price. Find the income elasticity of demand anddassify the product accordingly (state whether gadgets is anormal, necessity, luxury or an inferior product).2. A firm finds that its price elasticity of demand is 4.0.Currently, the firm is selling 2000 units per month at $5 per unit.Price must be lowered by=If it wishes to increases its quantity sold by 10%, by how muchit must lower its price?1 Suppose legalization-and subseque nt regulation-ofproducts Xand Y reduces their prices by 50% Estimates suggestThe expenditure on X would.the total quantity of X and Y demanded would rise by 83% and42%, respectively. Consequently, what would legalization do The expenditure on Y would.thependituon X and the expenditure on Y? (Stateincrease or decrease).4. Assume thar the price of product Y decreases by 5% and thequantity supplied decreases by 2%. Find the coefficient ofE =The supply of Y is priceprice elasticity of supply for good Y and describe this supplyin terms of elasticity (dastic, unitary elastic, or inelastic).3

Ep = (change in quantity)/ (average quantity) / (change in price)/(average price)

Q3. Refer to the diagram. Using the midpoint formula, calculate the price elasticity of demand between the prices of $15 and $12. Accordingly, state whether demand is elastic or inelastic between these two points. P$/unit 15 12 18 22 Q (units/week) Er =

Q3. Refer to the diagram. Using the midpoint formula, calculate the price elasticity of demand between the prices of $15 and $12. Accordingly, state whether demand is elastic or inelastic between these two points. P$/unit 15 12 18 22 Q (units/week) Er =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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