(1)Find q, ∂q/∂Y and ∂q/∂p, when the price that the firm sets is $30.00, and the average disposable income in the market is $3,000.00. (2)Find the price-elasticity of demand for the firm's good at the point in part (1).Use your answer to (2) to estimate the percentage change in demand if the firm raises the price for their good to $31.00 (and average income in the market stays fixed).
(1)Find q, ∂q/∂Y and ∂q/∂p, when the price that the firm sets is $30.00, and the average disposable income in the market is $3,000.00. (2)Find the price-elasticity of demand for the firm's good at the point in part (1).Use your answer to (2) to estimate the percentage change in demand if the firm raises the price for their good to $31.00 (and average income in the market stays fixed).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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(1)Find q, ∂q/∂Y and ∂q/∂p, when the
Transcribed Image Text:The demand equation for a certain firm's good is given by
q = 20(1.4Y – 20p)"/2,
where
o q = monthly demand for the fırm's good, measured in individual units.
• Y = average monthly disposable income in the market for the good, measured in $.
o p = the price/unit that the fırm sets for the good, measured in $.
%3D
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