Solution_Set__1

# Solution_Set__1 - work in the real world. 5. Step 1:...

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Principles of Economics Professor Padma Desai/Fall 2010 Solution Set #1 1. Downloads of television programs may be complements to downloads of music if the programs feature music the consumers wish to purchase. On the other hand, downloads of television programs are likely to be substitutes for downloads of movies. If Apple’s main goal is to increase downloads of music, they may choose to continue to offer downloads of television programs. If, on the other hand, they want to expand movie downloads, they may discontinue downloads of television programs. 2 . 3 . The quantity of flat screen televisions sold during this period must have increased. 4. Economic systems that do not allow people to keep most of the output they produce do not provide much incentive for people to work hard. Unfortunately, experience has shown that people are more self-interested and less altruistic than would be necessary for the system used in Oz to
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Unformatted text preview: work in the real world. 5. Step 1: Calculating average quantity and average price: Average quantity = 1300 2 131 , 1 469 , 1 Average price = 5 . 102 , 27 \$ 2 454 , 29 \$ 751 , 24 \$ Step 2: Calculating percentage change in quantity demanded and percentage change price: Percentage change in quantity demanded = % 26 100 300 , 1 131 , 1 469 , 1 Percentage change in price = % 4 . 17 100 5 . 102 , 27 454 , 29 \$ 751 , 24 \$ Step 3: Divide the percentage change in the quantity demanded by the percentage change in price to arrive at the price elasticity for demand curve: Price elasticity of demand = 5 . 1 % 4 . 17 % 26 Demand for Pace University is therefore elastic. Total revenue fell during this time from \$36,359,219 to \$33,312,474....
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## This note was uploaded on 09/29/2010 for the course ECON W1155 taught by Professor Gulati during the Fall '08 term at Columbia.

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