ECON 2100 Quiz: ECON 2100 Kennesaw State Quiz2 ECON2100 Summer2009 Section04
Document Summary
Consider a market in which the efficient level of trade is 30,000 units. Her reservation price as a buyer of this item is. If she buys a basketball from walmart she would. Consider a market in which demand is given by the linear demand function pd. Note that this linear demand curve is as illustrated below. Recall that for any linear demand function, demand is elastic along the top half of the demand curve (for this function, elastic for all prices between and ). Thus, this decrease in price occurs over the elastic portion of demand. Generally, when demand is elastic a decrease in price will result in an increase in total. Thus, this drop in price from to will lead to an increase in total. Alternatively, we can also see this result by observing that total consumer expenditures along this demand curve are given by. Is demand elastic, inelastic, or unit elastic at a price of.
