Suppose the supply and demand curves for a particular product are given by: QS = -20 + 2P , QD =100 - 2P where QS and QD are quantities in units and P is the price per unit. Calculate both the demand and supply elasticity around the equilibrium point.

Suppose the supply and demand curves for a particular product are given by: QS = -20 + 2P , QD =100 - 2P where QS and QD are quantities in units and P is the price per unit. Calculate both the demand and supply elasticity around the equilibrium point.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

See similar textbooks

Related questions

Q: For each of the regions listed in the following table, use the midpoint method to identify if the…

A: The mid - point elasticity measures the elasticity at the mid point of the two given points. The…

Q: QUESTION 4 If the demand equation for an item is D(x) = -5.0x + 80 and a supplier is willing to…

A: Equilibrium is achieved at a point where demand curve intersects the supply curve.

Q: Suppose the demand curve for a product is given by Q= 17 - 2P + 1Ps where P is the price of the…

A: The price elasticity of demand refers to the responsiveness of demand for good due to change in the…

Q: If worldwide annual sales of smartphones in 2014-2016 were projected to be approximately q=-3p+1,088…

A: Price elasticity of demand is given as Ed= % change in quantity demanded/% change in price =…

Q: Consider the following. Demand Function Quantity Demanded p = 128 x2 + 2 x = 6 Find the…

A: Answer: Given, Demand function: p=128x2+2Let us write the above equation in terms of…

Q: Consider the following demand function for good 'X": Q= 9-0.1p, -Py + 0.01p, + 0.001Y, where Own…

A: Income elasticity of demand depicts how much consumer responds with the change in his income.

Q: he smaller the price elasticity of demand, the Select one: a. more strongly buyers respond to a…

A: Elasticity of demand measures how quantity demanded responds as price of a good changes.

Q: According to the midpoint method, the price elasticity of demand for oranges between point X and…

A: The formula for calculating price elasticity of demand using mid point method: ed =…

Q: Cross price elasticity of demand between two products may equals zero, a case that is observed when…

A: Given statement: "Cross price elasticity of demand between two products may equals zero, a case that…

Q: The ministry of mines has estimated that the supply curve for vibranium is P(Q.)=70+ (18/10) x Q..…

A: Elasticity of supply is given as Es= Percentage change in quantity supplied / Percentage change in…

Q: Q.3.1 A store that sells maize meal discovers that when the price of 1kg maize meal Is R24 per…

A: The demand curve shows the inverse relationship between price and quantity demanded. The demand…

Q: Assume that the demand curve is a straight line. If the price per unit of a good rises from $2.40 to…

A: Point elasticity of demand = dQ/dP * P/Q Arc price elasticity = [(Q2 - Q1) / {(Q2 + Q1) / 2}] / [(P2…

Q: Given the demand function for commodity x as qx=1500-0.25px2 solve the elasticity of demand for x…

A: qx=1500-0.25px2 Slope of px dqx/dx= -0.5px=0.5(20)=-10

Q: You have the following information for your product: i. The price elasticity of demand is -0.9. ii.…

A: Answer- "Thank you fotr submitting the question. But, we are authorized to solve on question at a…

Q: SUPPLY AND DEMAND PROBLEM (Complete answer with solution) 1. Assume that the demand function is…

A: The different levels of quantity of a good that consumers are willing and able to buy at different…

Q: Which of the following statements is true? a. The more substitutes there are for a good the more…

Q: The demand function for your product is: Q(P) = 1478-22P where P is price Assuming that P=$50…

A: The price elasticity of demand is defined as the magnitude of change in the quantity demanded for a…

Q: The demand function for a certain metal is q = 100 - 2p, where p is the price per pound and q is the…

A: The demand and supply mechanisms have their several analysis and events and allow for significant…

Q: If the demand function of a commodity is Q = 36 − 4P, where P and Q are price and quantity…

A: Given Demand Funcation = Q = 36-4PPrice = 5 Q = 36 - 4 x 5 = 36 - 20 =16 ∆Q∆P = -4

Q: You are the manager of a firm that receives revenues of $60,000 per year from product X and $100,000…

A: It is given that the revenue from good X is $60,000 and that from good Y is $100,000. The price…

Q: Assume that the demand curve is a straight line. If the price per unit of a good rises from $10 to…

A: Answer: Given, Initial price=$10New price (X1)=$20 (assumed)Initial quantity demanded X2=800,000…

Q: Assume the income elasticity of demand for your product is 2.50 and that last year your firm sold…

A: The growth rate of real GDP is calculated by taking the difference between the real GDP of the…

Q: Write TRUE if the statement is right and FALSE if it is wrong. _____ 1. Disequilibrium means…

A: The demand shows the relationship between the quantity demanded and the price level. The demand is…

Q: These questions require application of economic theory relating to elasticity of demand supply. All…

A: Answer: Given, Price of rice Quantity of rice R24 per kg (Initial price) 306 kgs per week…

Q: For each of the following values of price elasticity of demand, indicate whether demand is elastic,…

A: Elasticity measures the responsiveness of quantity demanded and quantity supplied to one of its…

Q: The following demand function is given: q = 70 – 1,5p Calculate the arc price elasticity of demand…

A: Price elasticity of demand: - Price elasticity of demand measures the responsiveness of change in…

Q: Suppose the demand for a product is given by 2p3q=500,000+500p2 where p is the price in dollars and…

Q: Suppose that 50 units of a good are demanded at a price of $1 per unit. A reduction in price to…

A: Price elasticity of demand can be defined as the ratio of the change in percentage of quantity…

Q: Calculating elasticity Draw a set of coordinate axes on a piece of graph paper. Label the…

A: Variables' elasticities are defined as the degree to which they are sensitive to changes in other…

Q: The short run price elasticity for electricity consumption is -0.20. If the current price of…

A: The mid-point elasticity is the ratio of the average quantity demanded to the average price. It is…

Q: Find the equilibrium price and equilibrium quantity for a product whose supply and demand functions…

A: Equilibrium level is the point where demand in the market meets the supply. The price and quantity…

Q: Suppose the supply and demand curves for a particular product are given by: QS = -20 + 2P QD =100 -…

A: In a free market, equilibrium price and equilibrium quantity is determined by the forces of demand…

Q: The demand and supply function for a good in the market are as follows: Q = 60 – 5P Q, =10P where:…

Q: If the supply equation is Q= 50 + 4P +0.2p (a) find the price elasticity of supply if the current…

A: Here we calculate the price elasticity and percentage change in supply by using the given…

Q: Every month a certain firm purchases exactly 50 bottles of water to restock its kitchen, regardless…

A: When the product in a fixed quantity is bought without considering its price, then the…

Q: By evaluating the price elasticity of supply at the point P = 105, estimate the percentage increase…

A: Price Elasticity of supply equals the percentage change in quantity supplied is divided by the…

Q: The market research conducted by a firm in the drinking water industry shows that the demand for…

A: The demand function represents the connection between the amount required of a commodity (dependent…

Q: Which of the following statements best describes the elasticity of Good X along the demand curve?…

A: Answer Price Elasticity of demand = % change in Quantity/% change in price. Price is increasing from…

Q: As the manager at Clean-Well Corporation, your research staff provided you with the estimated demand…

A: Normal good refers to those good which shows a positive relationship between income and demand for…

Q: In a particular market, demand and supply curves are defined by the following equations: QD = 300 –…

A: Elasticity of demand refers to the responsiveness in quantity demanded due to change in its factors.…

Q: he smaller the price elasticity of demand, the Select one: a.more strongly buyers respond to a…

A: Price elasticity of demand is a measure of the percentage change in quantity demanded of a good or…

Q: Suppose the demand curve for a product is given by Q= 17- 2P + 1Ps where P is the price of the…

A: Elasticity refers to the responsiveness of one variable to changes in another variable; given that…

Q: Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in…

A: Elasticity of demand measures the responsiveness of quantity demanded with respect to change in…

Q: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of…

A: Answer: Given, Price Quantity (Q) $1 50 units $0.20 70 units Price elasticity of demand =-…

Q: For each of the regions listed in the following table, use the midpoint method to identify if the…

A: Elasticity of demand =% change in Quantity% change in Price Region change in Price change in…

Q: Suppose the demand function of a product is given by q = 14-5/p.1 1, the demand is elastic, and the…

A: Demand function : q = 14 - 5p31<p<10 p = 8

Q: Suppose a firm can sell 100 units if the price is $10. If the price doubles, the firm can sell 50…

A: Here, given information is, Initial price (P1): $10 Final price (P2): $20 (double of the initial…

Question

Suppose the supply and demand curves for a particular product are given by:

QS = -20 + 2P , QD =100 - 2P

where QS and QD are quantities in units and P is the price per unit.

Calculate both the demand and supply elasticity around the equilibrium point. [Hint: you can use either the point method or the average arc (midpoint) method.]

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

If automobiles and gasoline are complements, then their cross-elasticity coefficient is a. strictly greater than 1. b. positive. c. equal to zero. d. negative.
Prove that price elasticity of demand is not the same as the slope of a demand curve.
For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect on the demand for hybrid gasoline-electric vehicles such as the Toyota Prius. Then do the same for each of the determinants of supply in Equation 2.2. In each instance, would equilibrium market price increase or decrease? Consider substitutes such as plug-in hybrids, the Nissan Leaf and Chevy Volt, and complements such as gasoline and lithium ion laptop computer batteries.
Suppose a straight-line downward-sloping demand curve shifts rightward. Is the price elasticity of demand higher, lower, or the same between any two prices on the new (higher) demand curve than on the old (lower) demand curve?
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?