{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Quiz 2. Elasticity

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

This preview shows page 1. Sign up to view the full content.

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
This is the end of the preview. Sign up to access the rest of the document.

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., ε s > 1. Hint: Write the inverse supply function as P s = aQ s + b , where b > 0 is the positive vertical intercept....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online