Quiz 2. Elasticity

Quiz 2. Elasticity - through the origin with slope a )....

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ECON 201 Shomu Banerjee ELASTICITY QUIZ (a) The equation for an inverse demand function is given by P d = a Q d where a > 0 is a constant. Calculate the price elasticity of demand, ε . (b) The equation for a linear inverse supply function is given by P s = aQ s , where a > 0 is the slope of the supply curve (i.e., this inverse supply passes
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Unformatted text preview: through the origin with slope a ). Calculate the price elasticity of supply , s . (c) Show that if a linear inverse supply function has a positive vertical intercept, then it is elastic, i.e., s > 1. Hint: Write the inverse supply function as P s = aQ s + b , where b > 0 is the positive vertical intercept....
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This note was uploaded on 10/26/2010 for the course ECONOMICS ECON 201 taught by Professor Dr.shomubanerjee during the Summer '07 term at Emory.

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