User Account

All Pages

What is the elasticity of demand at the given point

Assignment Help Macroeconomics
Reference no: EM132229950

Question: 1. Assume that the demand for welding services is QD = a - bP where a > 0 and b > are exogenous parameters. The baseline case is b = 0.5 and a = 34. For parts (a-g), assume the baseline case.

(a) What is the elasticity of demand at the point where P=48?

(b) At what point on the demand curve is demand most elastic? (Hint: use the formula for elasticity to determine how the elasticity of demand changes as QD changes)

(c) Calculate revenue if Q=24.

(d) Calculate revenue as a function of Q (the revenue function).

(e) Calculate, using calculus, marginal revenue as a function of Q (the marginal revenue function).

(f) Calculate revenue if Q=25.

(g) Using the marginal revenue function, calculate the price that maximizes revenue.

For parts (h-n), you should leave a and b as exogenous variables with unspecified values. This means that most of your answers will be functions of a and b. (Treat a and b like constants and solve for everything in terms of a and b)

(h) Calculate the inverse demand function.

(i) Calculate the two intercepts and the slope of the demand curve.

(j) Calculate revenue as a function of Q.

(k) Graph the MR curve and the demand curve to show that the marginal revenue curve is a line having the same P-intercept as the demand curve but twice the slope.

(l) Calculate the elasticity of demand as a function of Q.

(m) For what values of Q is the elasticity of demand less than -1?

(n) For what values of Q is marginal revenue positive?

Assume that the inverse supply function in this market is PS(Q) = 4 + 10Q + Q2. Parts (o,p) use only the supply function, not the demand function.

(o) Draw the supply curve, including the numerical coordinates of at least three points on the curve.

(p) Calculate elasticity of supply at the point where Q=1.

Parts (q) and (r) combines supply and demand.

(q) Derive the equilibrium price and quantity, using algebra, in the baseline case.

(r) Calculate revenue at the equilibrium point.

3. (Extra Credit) Assume a seller faces the following demand function is QD = 3 - ln(P )

(a) Compute the inverse demand function.

(b) Compute the seller's marginal revenue as a function of Q.

(c) What price maximizes seller's total revenue?

(d) Compute elasticity of demand as a function of the quantity demanded.

Reference no: EM132229950

Questions Cloud

Analysis of current economic problem : Analysis of current economic problem. Two proposed topics (choose 1) or propose another similar tax/tariff issue. Trump's proposed tariffs on imported Chinese.
Generate a standing wave : Does the superposition generate a standing wave? Answer this question by using trigonometric identities to combine the two terms
Deal with the long-term future of the entire organization : The text states that strategic decisions are (1) rare, (2) consequential, and (3) directive. These deal with the long-term future of the entire organization.
What risks might such a plan pose : In recent years, Chrysler Corporation initiated three-shift or nearly continuous (21-hours-per-day) production at a number of its plants.
What is the elasticity of demand at the given point : Assume that the demand for welding services is QD = a - bP where a > 0 and b > are exogenous parameters. The baseline case is b = 0.5 and a = 34.
What are the coset leaders in the the slepian standard array : How many codewords are there in Ham(2,5)? What are the coset leaders in the the Slepian standard array
Converts cotton and other synthetic fibers into yarn : The firm owns two plants that are closely located: a yarn manufacturing plant that converts cotton and other synthetic fibers into yarn,
Formulate the problem as linear programming problem : Formulate the problem as a linear programming problem, assuming continuity of the decision variables.
Does contract exist between howard and the art dealer : Does a contract exist between Howard and the art dealer? Why or why not? (be sure to explain how all elements to a contract are, or are not, met).

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd