There are two goods, laptops and tablets. The demand for laptops is given by: D₁ = piptyc Where a, b, c are constants, p, is the price of laptops, pr is the price of tablets, Y is income. a) What are likely to be true about a, b, c? b) Calculate the price elasticity of demand for laptops. c) Calculate the Laptops cross price elasticity of demand. d) Comment on (b) and (c).

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There are two goods, laptops and tablets. The demand for laptops is given by:
DL = pip//yc
Where a, b, c are constants, p, is the price of laptops, pr is the price of tablets, Y is income.
a) What are likely to be true about a, b, c?
b) Calculate the price elasticity of demand for laptops.
c) Calculate the Laptops cross price elasticity of demand.
d) Comment on (b) and (c).
Suppose supply of laptops is given by:
SL= = 200
PL
PT
e) Find an expression which shows how the price of Laptops will change with the price of tablets in
equilibrium.
Now assume a = -2, b = 1, Y = 25000, c = 1, PT = 1
f) Find the equilibrium price and quantity of laptops.
g) Find the consumer and producer surplus in the laptop market
Transcribed Image Text:There are two goods, laptops and tablets. The demand for laptops is given by: DL = pip//yc Where a, b, c are constants, p, is the price of laptops, pr is the price of tablets, Y is income. a) What are likely to be true about a, b, c? b) Calculate the price elasticity of demand for laptops. c) Calculate the Laptops cross price elasticity of demand. d) Comment on (b) and (c). Suppose supply of laptops is given by: SL= = 200 PL PT e) Find an expression which shows how the price of Laptops will change with the price of tablets in equilibrium. Now assume a = -2, b = 1, Y = 25000, c = 1, PT = 1 f) Find the equilibrium price and quantity of laptops. g) Find the consumer and producer surplus in the laptop market
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