SI_562_Assignment_2_AnswerKey

SI_562_Assignment_2_AnswerKey - p.107: 3. 2 . 2 % 20 %- =-...

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Unformatted text preview: p.107: 3. 2 . 2 % 20 %- =- = Q E D % 44 % + = Q 11. a. P Y Q 5 . 5 15 2000- + = 150 euros; 15(000) euros P Y = = 1400 ) 150 ( 5 . 5 ) 15 ( 15 2000 =- + = Q ( 29 59 . 1400 150 5 . 5- =- = D E b. ( 29 16 . 1400 15 15 = = Y E 23. a. 4500 ) 10 ( 50 5000 , 10 $ =- = = Q P 4000 ) 20 ( 50 5000 , 20 $ =- = = Q P 3500 ) 30 ( 50 5000 , 30 $ =- = = Q P c. ( 29 111 . 4500 10 50 ) 10 $ (- =- = = P E D ( 29 250 . 4000 20 50 ) 20 $ (- =- = = P E D ( 29 429 . 3500 30 50 ) 30 $ (- =- = = P E D d. P Q D 50 5000 4250- = = 15 $ = P 27. If the price of DVD players declines by 20% and the total revenue from the sale of DVD players rises, this indicates that the demand for DVD players is price elastic. We cannot determine the impact of this price reduction on the firms profits without also knowing the cost function facing the firm. p.125: 1. a. budget constraint 4Q A + 6Q B = 48 b. Forming the unconstrained Lagrangian function: ) 48 6 4 ( 6 . 5 . 2 2 ) , , ( 2 2- +-- +- + = B A B B A A B A...
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This note was uploaded on 12/16/2009 for the course SI 562 taught by Professor Chen during the Fall '08 term at University of Michigan.

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SI_562_Assignment_2_AnswerKey - p.107: 3. 2 . 2 % 20 %- =-...

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