Principles of Macroeconomics Assignment
lfhawlsa''hhhhhhhhhhldECO 2023 H. Principles of Macroeconomics
Due: Wednesday, October 30, 2013
NOTE: All answers must be typed! Han;] dwritten problem sets will get zero credit.
1. For the following three cases, use a midpoint formula to calculate the coefficient for the cross-price elasticity of demand and identify the relationship between the two goods (complement, substitute, or independent).
a. The quantity demanded for good A p;increases from 300 to 400 as the price of good B increases from $1 to $2.
Show your calculations here:
Coefficient____________________ Relationship _____________________
b. The quantity demanded for good J decreases from 2000 to 1500 as the price of good K increases from $10 to $15.
Show your calculations here:
Coefficient____________________ Relationship _____________________
c. The quantity demanded for good X increases from 100 to 101 units as the price of good Y increases from $8 to $15.
Show your calculations here:
Coefficient____________________ Relationship _____________________
2. Complete the following table, using the demand data given, by computing total revenue at each of the seven prices and the six price elasticity coefficients between each of the seven prices (using the mid-point formula), and indicate whether demand is elastic, inelastic, or unit elastic between each of the seven prices.
Price Quantity demanded Total revenue Elasticity coefficient Character of demand
$1.00 300 $_____
.90 400 _____ _____ _________
.80 500 _____ _____ _________
.70 600 _____ _____ _________
.60 700 _____ _____ _________
.50 800 _____ _____ _________
.40 900 _____ _____ _________
3. The supply and demand curves for the wheat market are given by the following equations:
Demand: QD = 20,000,000 – 4,000,000P
Supply: QS = 7,000,000 + 2,500,000P
a. Determine consumer surplus at the equilibrium price and quantity.
b. Assume that the government has imposed a price
Due: Wednesday, October 30, 2013
NOTE: All answers must be typed! Han;] dwritten problem sets will get zero credit.
1. For the following three cases, use a midpoint formula to calculate the coefficient for the cross-price elasticity of demand and identify the relationship between the two goods (complement, substitute, or independent).
a. The quantity demanded for good A p;increases from 300 to 400 as the price of good B increases from $1 to $2.
Show your calculations here:
Coefficient____________________ Relationship _____________________
b. The quantity demanded for good J decreases from 2000 to 1500 as the price of good K increases from $10 to $15.
Show your calculations here:
Coefficient____________________ Relationship _____________________
c. The quantity demanded for good X increases from 100 to 101 units as the price of good Y increases from $8 to $15.
Show your calculations here:
Coefficient____________________ Relationship _____________________
2. Complete the following table, using the demand data given, by computing total revenue at each of the seven prices and the six price elasticity coefficients between each of the seven prices (using the mid-point formula), and indicate whether demand is elastic, inelastic, or unit elastic between each of the seven prices.
Price Quantity demanded Total revenue Elasticity coefficient Character of demand
$1.00 300 $_____
.90 400 _____ _____ _________
.80 500 _____ _____ _________
.70 600 _____ _____ _________
.60 700 _____ _____ _________
.50 800 _____ _____ _________
.40 900 _____ _____ _________
3. The supply and demand curves for the wheat market are given by the following equations:
Demand: QD = 20,000,000 – 4,000,000P
Supply: QS = 7,000,000 + 2,500,000P
a. Determine consumer surplus at the equilibrium price and quantity.
b. Assume that the government has imposed a price