hw02 - UNIVERSITY OF WISCONSIN Economics 101 Spring 2007...

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UNIVERSITY OF WISCONSIN Economics 101 – Spring 2007 Professor Wallace Problem Set 2 Due on February 9th at noon in your TA’s mailbox (opposite 7226 SS) Please be sure to include (1) your name , (2) your teaching assistant’s name , and (3) your section time and number on your answer sheet. Please staple pages together. Also note that late homework will not be accepted. Remember that you can help each other but each student has to hand a hand-written solution of the problem set. Use the following information to answer the next 3 questions: The demand for apples is given by Q = 15 – 3P, where the quantity is measured in bushels. 1) What is the point elasticity of demand when Q = 6 bushels? a) 3 b) 3/2 c) 1/3 d) 1/6 2) What is the arc elasticity of demand between the prices of $1 per bushel and $2 per bushel? (i.e., P = 1 and P = 2). a) 3/7 b) 2/7 c) 1/6 d) 1/2 3) An orchard owner currently sells apples for $1 per bushel. Due to poor weather in Chile, the supply curve for apples shifts left, and the new equilibrium price is $2 per
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hw02 - UNIVERSITY OF WISCONSIN Economics 101 Spring 2007...

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