The demand for Widgets (QX) is a function of the price of widgets (PX), the price of wooz (PY), and per capita income (I): QX = 1950 - 10 PX + 5 PY - 0.11 Currently, PX = 25, PY = 10 and I = 15,000. (a) Calculate the elasticity of demand for widgets with respect to its own price, the price of woozles, and income. (b) Over what range of prices is the demand for widgets elastic? (c) If the cost per widget is 10 and the manufacturer behaves as a monopolist, how many widgets will be sold and at what price: (d) By how much must the price of widgets change if there is a 1% decrease in per capita income and the goal is to keep QX constant.

The demand for Widgets (QX) is a function of the price of widgets (PX), the price of wooz (PY), and per capita income (I): QX = 1950 - 10 PX + 5 PY - 0.11 Currently, PX = 25, PY = 10 and I = 15,000. (a) Calculate the elasticity of demand for widgets with respect to its own price, the price of woozles, and income. (b) Over what range of prices is the demand for widgets elastic? (c) If the cost per widget is 10 and the manufacturer behaves as a monopolist, how many widgets will be sold and at what price: (d) By how much must the price of widgets change if there is a 1% decrease in per capita income and the goal is to keep QX constant.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter20: Elasticity: Demand And Supply

Section: Chapter Questions

Problem 13E: Using the following equation for the demand for a good or service, calculate the price elasticity of...

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