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Summer Tut CH1 Solutions

Summer Tut CH1 Solutions - McGill Faculty of Engineering...

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1 McGill Faculty of Engineering MIME 310 Engineering Economy Tutorials Chapter 1. Introduction
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2 McGill Faculty of Engineering MIME 310 Engineering Economy Tutorials 1.1 Consider the demand schedule shown to the right. Tangent Q i t t Price Quantity Demand 0 Graphical Method Must be origin Plot the demand curve and approx- imate the point elasticity at various points using the graphical method. Compare these results with the arc elasticities determined between adjacent points. E D = ( Q i - Q t ) Q t P t P t = ( Q i - Q t ) P t P t Q t = ( Q i - Q t ) / Q t P Q Point Price ($/unit) Quantity demanded (units/period) A 7 450 B 6 750 C 5 1250 D 4 2000 E 3 3250 F 2 4750 G 1 8000
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