A consumer 15 in equilibrum when Px=7 and Py=4, and he is consuming 40 units of good X and 80 units of good Y. If Py reduces to Rs. 5, he moves to a new equilibrium where he consumes 50 units of good X Calculate the own and cross price elasticities of demand using this information. What will be the shape of

A consumer 15 in equilibrum when Px=7 and Py=4, and he is consuming 40 units of good X and 80 units of good Y. If Py reduces to Rs. 5, he moves to a new equilibrium where he consumes 50 units of good X Calculate the own and cross price elasticities of demand using this information. What will be the shape of

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 8QFR

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Estimates presented in Exhibit 5 show that Android users have a higher price elasticity of demand for apps in the Google Play Store than do iPhone users in the Apple App Store. Why might Android users tend to be more sensitive to app prices than iPhone users? What categories or types of apps (for example, games/social media) do you think have the highest price elasticities?
Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.
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