HO3_KeyF06 - Cal Poly Pomona EC 201 Principles of...

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Unformatted text preview: Cal Poly Pomona, EC 201 Principles of Microeconomics —- Professor BroWn Handout # 3 Price per unit of X Demand- new so 100 120 0mm ”fx 1) Use the above graph to calculate price elasticity of demand. (use the numbers provided — note that they do not necessarily correspond to the distances on the graph) - 20/610 g — a)be een 1n andC , , ' tw p0 tsA 90/50 A] 96’ b) between pointsBandD ”20/“ D 20/59 1 6?”: '73 c) For which segment is demand more elastic (or “less inelastic"), BD or AC? AC more alas H6 2) a) What is the income elasticity of demand for good Z if a 10% increase in income causes a 5% increase in the quantity demanded of good Z at a constant P2? 9) A Q“; ‘L g‘ : = -L:: .5.- PaZIIW -/_-/b I}, + b) Is good Z a normal good or inferior good? AIDE/Mt 3) a) What is the cross-price elasticity of demand for good X if a 10% decrease in price of good Y, (Py 1) causes a 5% increase in the quantity demanded of good X (Qx T) at a constant ’price of X, PX? 45.0 I b) Are goods X and Y substitutes or complements? _" I 0 ’0 ':.--"' [5 a; 9-. ('0 mule»? en / s ...
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