Price elasticity, Microeconomics

Assignment Help:

The price elasticity ( ε ) of demand for Q has been estimated at -0.5. Current consumption Q* is 70 units and market price (P*) is 0.70.

a. Fit a linear demand curve to the observed market data. Illustrate your result using a suitably labelled diagram. Hint: ε - = b(P*/Q*)and the equation for a linear demand function is Q* = a-bP*.

b. Now assume that the price of Q increases to P* = 0.80. Using your estimated demand function, calculate the change in consumer surplus arising from the price increase. Illustrate your result.


Related Discussions:- Price elasticity

Is there a trade-off between inflation and unemployment, Is there a trade-o...

Is there a trade-off between inflation and unemployment? The Keynesian side posits that policies can indeed be used to stimulate demand - demand-side policies - and those mar

Describe the income and cross elasticity of demand, Problem: a. With th...

Problem: a. With the help of diagrams, describe how the price and quantity of potatoes will change under the different circumstances: (i) A severe drought affecting its pro

Visit to village panchayat for agriculture based project., any village panc...

any village panchayat in west bengal and get information for doing a project.

Health Reform, Healthcare Reform is currently in the news almost every day....

Healthcare Reform is currently in the news almost every day. The current approach proposes a government sponsored health insurance “market” to help control costs and make healthcar

Stoichiometry , Mg(OH)2 + 2HCl-----> MgCl2 +2H2O how many grams of magnesiu...

Mg(OH)2 + 2HCl-----> MgCl2 +2H2O how many grams of magnesium chloride can be produced from 14.60mL of a 0.546M hydrogen chloride solution?

Microeconomics assignment, suppose the production function is given as:X=b0...

suppose the production function is given as:X=b0Lb1Kb2,where b0=level of technology find marginal product of factors(MPL0and MPK) find factor intensity

Four-firm concentration ratios , a) The four-firm concentration ratios for ...

a) The four-firm concentration ratios for the following industries have been found from the Economic Census for Manufacturing (NAICS 31-33) as follows. The four-firm concentration

Central planning of economic system, Q. Central Planning of economic system...

Q. Central Planning of economic system? Central Planning: An economic system in that crucial decisions regarding consumption, investment, exchange rates, interest rates and pri

Production function, how to find least cost combination of factor inputs gi...

how to find least cost combination of factor inputs given the production

Demand elastic- inelastic or unit elastic, Questions (i)   You are an i...

Questions (i)   You are an industry analyst. Last year, the production cost of Microprocessor increased remarkably due to labor unionization. Nevertheless, the industry experie

Write Your Message!

Captcha
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!

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