Problem Set 1

# Problem Set 1 - Problem Set 1 Due date: February 9, 2007 at...

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Problem Set 1 Econ 410 – 009, Spring 2007 Due date: February 9, 2007 at the beginning of class In order to receive full credit for your answers you need to show your work (calculations, derivations, reasoning). Print your Name_______________________________ Sign the honor Pledge affirming that you have neither given nor received unauthorized aid on this assignment and have complied with all of the rules of this assignment. Signature______________________________________ Turn this sheet in with your answers. 1. Consider a competitive market for which the quantities demanded (Q D ) at various prices (P) are given below: P Q D Elasticity TR 11 3 9 5 7 7 5 9 3 11 a. (5 pts) What is the equation for the demand? b. (10 pts) Calculate elasticities and total revenue at these points. c. (5 pts) Graph the demand curve and label elasticities along the demand curve. Now, using a separate graph, draw the total revenue curve against quantity. Label the elasticities along this curve. d. (5 pts) What is the relationship between total revenue and elasticity? 2. (15 pts) American Mining Company is interested in obtaining estimates of the supply and demand curves for coal. The firm’s research department informs you that the price elasticity of supply is 1.7, the price elasticity of demand is –0.85, and the current equilibrium price and quantity are 41 dollars per ton and 1206 tons, respectively. Using this information, derive the linear supply and demand

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## This note was uploaded on 08/05/2008 for the course ECON 410 taught by Professor Codrin during the Spring '07 term at UNC.

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Problem Set 1 - Problem Set 1 Due date: February 9, 2007 at...

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