EBK MICROECONOMICS
EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
Question
Book Icon
Chapter 2, Problem 2.17P
To determine

(a)

To calculate the equilibrium price and quantity of golf balls, when R = 2 and T = 10.

Expert Solution
Check Mark

Explanation of Solution

The following equations for demand and supply are given:

  Demand:Qd=902P2TSupply:Qs=9+5P2.5R

Substitute the values of R and T to solve for demand and supply equations in terms of price only as follows:

  Demand:Qd=902P2TQd=902P2(10)Qd=902P20Qd=702PSupply:Qs=9+5P2.5RQs=9+5P2.5(2)Qs=9+5P5Qs=14+5P

At equilibrium,

  Qd=Qs702P=14+5P7P=84P=$12

Substitute the value of price in any of the two equations to solve for equilibrium quantity as follows:

  Qd=702PQd=702($12)Qd=7024Q=46

To determine

(b)

To calculate the price elasticity of demand and price elasticity of supply at equilibrium values.

Expert Solution
Check Mark

Explanation of Solution

The price elasticity of demand measures the degree of responsiveness of a change in the quantity demanded for a given change in the price level. It is calculated as follows:

  ed=d( Q d )dP×PQd=d( 702P)dP×P( 702P)=2×$1246=0.52

The price elasticity of demand at equilibrium values is '-0.52'.

The price elasticity of supply measures the degree of responsiveness of a change in the quantity supplied for a given change in the price level. It is calculated as follows:

  es=d( Q s )dP×PQs=d( 14+5P)dP×P( 14+5P)=+5×$1246=+1.30

The price elasticity of supply at equilibrium values is '+1.30'.

To determine

(c)

Cross-price elasticity of demand for golf balls with respect to the price of titanium.

Expert Solution
Check Mark

Explanation of Solution

The cross-price elasticity of demand measures the degree of responsiveness of a change in the quantity demanded of a good for a given change in the price of some other good.

It is calculated as follows:

  εgolf,titanium=d( Q d )dPT×PTQd=d( 902P2T)dT×T( 902P2T)=2×10[902( 12)2( 10)]=2×1046=0.43

The negative sign indicates that titanium and golf balls are complements, i.e., when the price of titanium goes up, the demand for golf balls decreases.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Describe the various measures used to assess poverty and economic inequality. Analyze the causes and consequences of poverty and inequality, and discuss potential policies and programs aimed at reducing them, assess the adequacy of current environmental regulations in addressing negative externalities. analyze the role of labor unions in labor markets. What is one benefit, and one challenge associated with labor unions.
Evaluate the effectiveness of supply and demand models in predicting labor market outcomes. Justify your assessment with specific examples from real-world labor markets.
Explain the difference between Microeconomics and Macroeconomics?  2.) Explain what fiscal policy is and then explain what Monetary Policy is? 3.) Why is opportunity cost and give one example from your own of opportunity cost. 4.) What are models and what model did we already discuss in class? 5.) What is meant by scarcity of resources?
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Microeconomics
Economics
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Micro Economics For Today
Economics
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Cengage,
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Macroeconomics
Economics
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning