Principles of Macroeconomics Assignment

Topics: Supply and demand, Elasticity, Price elasticity of demand Pages: 3 (638 words) Published: October 25, 2013
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.

PriceQuantity demandedTotal revenueElasticity coefficientCharacter of demand $1.00300$_____
.90400___________________
.80500___________________
.70600___________________
.60700___________________
.50800___________________
.40900___________________

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...
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