Question

- If the elasticity of demand for good x is minus 0.5 at the
price P= $10 and quantity Q = 8000,
- what is It the value of the parameter b if the demand function is of the form Q = A + bP?
- What is the value of the parameter A?
- At what price and quantity is total consumer expenditure for good x at its maximum?
- At price = $10, quantity = 8000 and Income(M) = $1000, the income elasticity of demand is .025. Expand your estimation of the demand function to identify the parameters K, b and c of the form Q = K + bP + cM.
- What is the value of the parameter b if the demand function is
of the form Q = AP
^{b}?

Answer #1

If the marginal cost of production of a good is a positively
sloped function of the quantity supplied to the market and the
price of the good is a negatively sloped function of the quantity
demanded,
In a monopoly market price there will always be a dead-weight
loss compared to the result of a competitive market.
In a competitive market, the long-run equilibrium quantity
supplied and demanded will be the quantity at which long run
marginal cost and price are...

The demand for mysterious good X in Lansing is Q = 12 ? P, where
P is the price of good X per pound and Q is the quantity demanded
in pounds. The marginal cost of producing the good is $2 per pound.
There is no fixed cost of producing the good. There is only one
firm, Alice, who can produce the good. Alice cannot price
discriminate against any consumer. (a) What is the marginal revenue
curve? (b) What is...

Price Elasticity of Demand for good X: −0.34
Income Elasticity of Demand for good X: 0.56
Cross Price Elasticity of Demand for goods X and Y: 0.04
Given the information above, determine the following:
1. whether good X is elastic, unit elastic, or inelastic
2. whether good X follows the “law” of demand
3. whether good X is normal or inferior
4. whether good X is a luxury or a necessity
5. whether good X and good Y are complements,...

Every firm in a competitive market has the production
function
Q =
K.5L.5and it is observed
that long-run total market supply is described by the function P =
.025Q. These facts suggest that
This is a decreasing cost industry
This is an increasing cost industry.
The price of at least one input increases as market demand for
this good increases.
Some owners of resources used in the production of this product
earn economic rents.
None of the above.
If the...

1) The income elasticity of demand for Good Z is –0.2, while the
cross-price elasticity of demand between Good Z and Good Y is 1.63.
Which of the following statements is correct regarding Good Z?
Group of answer choices
Good Z is a inferior good, and Goods Z and Y are
complements.
Good Z is an inferior good, and Goods Z and Y are
substitutes.
Good Z is a normal good, and Goods Z and Y are complements.
Good Z...

The aggregate demand for good X is Q = 20 minus P, and the
market price is P = $8. What is the maximum amount that consumers
are willing to pay for the quantity demanded at this price?

Suppose the own price elasticity of demand for good X is -3, its
income elasticity is -2, its advertising elasticity is 4, and the
cross-price elasticity of demand between it and good Y is -2.
Determine how much the consumption of this good will change if:
Instructions:
Enter your responses as percentages. Include a minus (-)
sign for all negative answers.
a. The price of good X decreases by 7 percent.
b. The price of good Y increases by 10...

Suppose that the demand function for good x is given by
x = 10 - 2px + py + 0.5M, where
M=10 is income and px = 2 and py =
5.
(a) Calculate the own price elasticity of demand.
(b) Calculate the cross price elasticity of demand. Are the
goods substitutes or complements?
(c) Is the good normal or inferior? Calculate the income
elasticity of demand.
(d) Is the good a necessity or a luxury?

The cross elasticity of demand for good A and good B is
minus−0.7.
This means that
A.
if the price of good A increases by 10 percent, the quantity
demanded of good B decreases by 7 percent.
B.
the goods are substitutes.
C.
if the price of good A increases by 10 percent, the quantity
demanded of good B increases by 7 percent.
D.
the goods are complements.
E.
both A and D are correct.

Suppose the own price elasticity of demand for good X is -2, its
income elasticity is -1, its advertising elasticity is 2, and the
cross-price elasticity of demand between it and good Y is -3.
Determine how much the consumption of this good will change if:
Instructions: Enter your responses as percentages. Include a minus
(-) sign for all negative answers.
a. The price of good X decreases by 4 percent. percent
b. The price of good Y increases by...

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