The graph below shows the demand curve of two goods by an individual, use the information in the graph to answer the questions that follows; Price GH¢ 30.00 GHe 25.00 D1 D2 2000 2500 3000 Quantity (gallons per day) (a) Calculate the price elasticity of demand for the demand curve, Di, from point A to point C, and the price elasticity of demand for D2 from point A to point B. which demand curve is more elastic, Di or D2? Briefly explain your answer. (b) Given the expenditure function as e(p.q)-pq where p is the price and q is quantity demand. Suppose the individual was purchasing 2000 gallons per day at a price of GHc30.00 per gallon and the price is cut to GHc25.00 per gallon. calculate tihe change in total expenditure if the demand curve of the individual is D1? What will be the change in total expenditure if demand is D2?

The graph below shows the demand curve of two goods by an individual, use the information in the graph to answer the questions that follows; Price GH¢ 30.00 GHe 25.00 D1 D2 2000 2500 3000 Quantity (gallons per day) (a) Calculate the price elasticity of demand for the demand curve, Di, from point A to point C, and the price elasticity of demand for D2 from point A to point B. which demand curve is more elastic, Di or D2? Briefly explain your answer. (b) Given the expenditure function as e(p.q)-pq where p is the price and q is quantity demand. Suppose the individual was purchasing 2000 gallons per day at a price of GHc30.00 per gallon and the price is cut to GHc25.00 per gallon. calculate tihe change in total expenditure if the demand curve of the individual is D1? What will be the change in total expenditure if demand is D2?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 4.9P: (Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of...

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