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Determine the price elasticity of demand at each quantity demanded using the arc or midpoint formula: Percentage change in quantity demanded =(Q2-Q1)/Q1 divided by percentage change in price= (P2-P1)/P1.

Redo the exercise using price changes of $10 rather than $5.

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Anne Gillian Duero
Anne Gillian DueroLv10
25 Oct 2020

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Related questions

Question 9

firms:

Q1=75-P1+.5P2

P1=75+.5P2-Q1

75+.5P2-2Q1=30

Q2=75-P2+.5P1

AC=MC=30

a) Confirm firm 1's optimal price depends on P2 according to P1=52.5+.25P2 (Set up profit expression of profit firm 1=(p1-30)Q1 =(P1-30)(75-P1+.5P2) and set marginal profit = 0 to solve for P1 in terms of P2. Alternatively, set MR1=MC and solve for Q1 and then P1 in terms of P2.

Question 10

Instead, the firms compete by setting quantities rather than prices. Rewriting the demand equationsP1=[150-(2/3)Q2]-(4/3)Q1
and P2=[150-(2/3)Q1]-(4/3)Q2. Increases in the competitor's output lowers the intercept of the firm's demand curve

a) MR1=MC to confirm that firm 1's optimal quantity depends on Q2, according to Q1=45-.25Q2

b) Equilibrium Q1=Q2

70) The income elasticity of demand equals the percentage change in A) price divided by the percentage change in income. B) price divided by the percentage change in quantity demanded. C) income divided by the percentage change in quantity demanded. D) quantity demanded divided by the percentage change in income. E) quantity demanded divided by the percentage change in price

8) The price elasticity of demand equals magnitude of the in the divided by the _in the A) percentage change; quantity demanded; percentage change; quantity supplied B) percentage change; quantity demanded; percentage change; price C) change; price; change; quantity demanded D) change; quantity demanded; change; price E) percentage change; price; percentage change; quantity demanded

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