In Example 2.8, we discussed the recent increase in world demand for copper, due in part to China's rising consumption. Using the original elasticities of demand and supply (i.e., Es=1.5 and Ep = -0.5), calculate the effect of a 30-percent increase in copper demand on the price of copper. Recall that the demand equation is Q=27-3P, the supply equation is Q= -9+9P, the initial equilibrium price is P* = $3.00 (dollars per pound), and the initial equilibrium quantity is Q* 18 (million metric tons per year). As a result of this change in demand, the price of copper will by $ (Enter your response rounded to two decimal places.)

In Example 2.8, we discussed the recent increase in world demand for copper, due in part to China's rising consumption. Using the original elasticities of demand and supply (i.e., Es=1.5 and Ep = -0.5), calculate the effect of a 30-percent increase in copper demand on the price of copper. Recall that the demand equation is Q=27-3P, the supply equation is Q= -9+9P, the initial equilibrium price is P* = $3.00 (dollars per pound), and the initial equilibrium quantity is Q* 18 (million metric tons per year). As a result of this change in demand, the price of copper will by $ (Enter your response rounded to two decimal places.)

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?
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