Reference no: EM13316393
1.Consider the following weekly supply and demand tables for product X:
P Qd Qs
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16 0 35
14 5 30
12 10 25
10 15 20
8 20 15
6 25 10
4 30 5
2 35 0
c. Calculate the ARC elasticity of demand (midpoint formula) when the price moves from $6 to $2. Write the formula and show your work.
d. Redraw the Demand curve (only) in a new diagram. Demonstrate the Total Revenue change geometrically and indicate the Loss and Gain areas between the prices of $6 and $2 (Price has moved UP from $2 to $6)
e. In this diagram as above (part d), demonstrate and calculate the Consumer Surplus when price is set at $12 (P=12).
f. If for a product, a 10% increase in consumer income leads to a 20% decrease in sale, how would you evaluate the Income Elasticity of Demand? Is this a Normal Good or an Inferior good? Calculate the Income elasticity of Demand first and then give your explanations for both questions
g. If a 10% increase in the product such as Y, leads to a 20% increase in the sale of Product X, then what can you say about the Cross Elasticity of Demand for X & Y?
Are X & Y Substitutes or Complements? Calculate and Explain
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Calculate the arc elasticity of demand
: Redraw the Demand curve (only) in a new diagram. Demonstrate the Total Revenue change geometrically and indicate the Loss and Gain areas between the prices of $6 and $2 (Price has moved UP from $2 to $6).
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Calculate the income elasticity of demand first and then
: Redraw the Demand curve (only) in a new diagram. Demonstrate the Total Revenue change geometrically and indicate the Loss and Gain areas between the prices of $6 and $2 (Price has moved UP from $2 to $6)
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