EBK MICROECONOMICS
EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
Question
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Chapter 2, Problem 2.4P
To determine

(a)

To fill the given box.

Expert Solution
Check Mark

Explanation of Solution

Use the following formula to find the elasticity of demand.

  εQ,P = ΔQΔPPQQ = 300-100PΔQΔP = -100= -100 × P300-100P.

  PP3

Find the values of Qdby inserting the values in Q = 300  100P

P 0.100.450.500.552.50
Qd 29025525024550
eQ,P −0.035−0.176−0.2−0.225−5
To determine

(b)

To draw the graph for demand function.

Expert Solution
Check Mark

Explanation of Solution

To plot the graph just find out inverse demand function.

The inverse demand function, P = 3  1100Qd

When price is zero then quantity is:

  P = 3  1100Qd0=3  1100Qd3= 1100QdQd=300

Similarly, when quantity is zero then price is $3.

  EBK MICROECONOMICS, Chapter 2, Problem 2.4P

The Y axis of graph shows the price and x axis shows the quantity. When price is $3 then quantity demanded is zero. When price is zero then the quantity demanded is 300 units.

To determine

(c)

To find the price at which demand is unitary elastic.

Expert Solution
Check Mark

Explanation of Solution

Elasticity of demand is equal to:

  εQ,P =  ΔQdΔPPQdQ = 300-100PΔQΔP = -100= -100 × P300-100P.

  PP3

Let's take the price $1.50, then the elasticity of demand is -1.

  εQ,P=1.51.53=1.

Thus, at price $1.50 the demand will be unitary elastic.

To determine

(d)

To find the price at which demand is inelastic.

Expert Solution
Check Mark

Explanation of Solution

Elasticity of demand is equal to:

  εQ,P =  ΔQdΔPPQdQ = 300-100PΔQΔP = -100= -100 × P300-100P.

  PP3

Let's take the price $1.50, then the elasticity of demand is -1.

  εQ,P=1.51.53=1.

Here, all price below $1.50 will give inelastic demand.

To determine

(e)

To find the price at which demand is elastic.

Expert Solution
Check Mark

Explanation of Solution

Elasticity of demand is equal to:

  εQ,P =  ΔQdΔPPQdQ = 300-100PΔQΔP = -100= -100 × P300-100P.

  PP3

Let's take the price $1.50, then the elasticity of demand is -1.

  εQ,P=1.51.53=1.

Here, all prices above $1.50, will give the demand is elastic.

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