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Unformatted text preview: 2 1) Suppose demand for inkjet printers is estimated to be Q = 1000 – 5 p + 10 p X – 2 p Z + 0.1 Y . If p = 80,, p X = 50, p Z = 150, and Y = 20,000; answer the following: a. What is the price elasticity of demand? b. What is the cross price elasticity with respect to commodity X ? Give an example of what commodity X might be. c. What is the cross price elasticity with respect to commodity Z ? Give an example of what commodity Z might be. d. What is the income elasticity? 2) Suppose a tax on coke of $0.10 per can is levied on firms. As a result of the tax, the equilibrium price increases from $1.20 to $1.25. What fraction of the incidence falls on consumers? On firms? Suppose the supply elasticity is 0.6. What must the demand elasticity be?...
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- Spring '07
- Supply And Demand, Sue