Harding Enterprises has developed a new product called the Gillooly Shillelagh. The market demand for this product is given as follows: Q = 240 - 4P a. At what price is the price elasticity of demand equal to zero? b. At what price is demand infinitely elastic? c. At what price is the price elasticity of demand equal to one? d. If the shillelagh is priced at $40, what is the point price elasticity of demand?
1. Harding Enterprises has developed a new product called the Gillooly Shillelagh. The market
2. Suppose the marginal rate of substitution is constant at 6 for all possible consumption bundles. Next suppose that the price of good 1 decrease, and the ratio P1/P2 is greater than 6. Show that the income and substitution effects from this price change are both zero.
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