# ECON201PSet1Answers - W ELLESLEY COLLEGE D EP ARTMENT O F E...

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b. With our calculated elasticity, we need to fit the given data into a demand function of the form: QD = a - b*P Given that the demand curve is linear, we KNOW that the elasticity is NOT. Thus, our elasticity calculation from (a) can be integrated into our general expression for elasticity as follows: _ C~ ~ _ c-_·-- D Q Now, plug in either point (I'm using the "Before" point, but it's also acceptable to use the "After" point) to now solve for b 20 ~ l~J ~) 3 Now, we can return to the demand function above and use our calculated b value with either point on the demand curve to solve for the value of a : b - Q ~ V\. - 5 r ~) ~S\~~ \~\~~ l l 0 ~ c, - s ls) -;::: ) ~ ~ '3 S [0." -:. 35 - Sf' \ c. A demand function of the constant elasticity form would resemble: As we know, this demand function has a constant elasticity of -b , s~o already we know that our answer will take the form: ~ D ;; 0 ..... ? l-' ~ Jtf-) All that remains is to find the value of a ,which we can do by using one of our data points: ( (\~~ \ '(\, Q \l;'V S Ii-<:,{ ~t" 'bJ; Q. I) 0')' ~() ~ <k "3 ~ 31 t --'} ,,~ CdO'> (?::>~)~ =[ Its ~ - 3/'f :: LtS.6,· s j [Author's Note: Your answers mIght differ slightly from those here if you decided to use the other data point when solving for a and/or b, and that's just fine.]
a.

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