Assume that the market demand for cheese is given by the function Qd = 252 – 4P, and the supply is perfectly inelastic such that Qs = 172, as farmers cannot change the quantity supplied of cheese in the short-run. Calculate the following: 1. The consumer surplus in the market for cheese. 2. The own-price elasticity of demand for cheese at the price of $40 per unit. 3. The reservation price of consumers, at the point where the elasticity of demand is equal to 0.189.

Assume that the market demand for cheese is given by the function Qd = 252 – 4P, and the supply is perfectly inelastic such that Qs = 172, as farmers cannot change the quantity supplied of cheese in the short-run. Calculate the following: 1. The consumer surplus in the market for cheese. 2. The own-price elasticity of demand for cheese at the price of $40 per unit. 3. The reservation price of consumers, at the point where the elasticity of demand is equal to 0.189.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 6E

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