MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781264207718
Author: Colander
Publisher: MCG CUSTOM
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Chapter 6, Problem 6QAP

Price elasticity is not just a technical economic concept. It also reflects the distribution of economic power-the bargaining power and economic opportunities of buyers and sellers.

  1. a. When suppliers (for example, landlords or energy companies) hold disproportionate power over buyers, or consumers (for example, employers in low-wage labor markets) hold disproportionate power over sellers, what meaning do elasticities have?
  2. b. Should anything be done about those inequities? (Radical)
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The preferences of a consumer are represented by the following utility function: U = min (×1, 2x2) If income is 100 and p1=p2=1 a) What is the optimal bundle? b) If p₁=4, what is the new optimal bundle? c) If p2=4, what is the new optimal bundle? d) Decompose the price effect into income and substitution effect and provide a graphical representation of your results.
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How To Understand Elasticity (Economics); Author: Market Power;https://www.youtube.com/watch?v=1XXhpHJTglg;License: Standard Youtube License