w10_ps1_econ100

# w10_ps1_econ100 - Problem Set 1 Econ 100, Winter 2010 Due:...

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Problem Set 1 Econ 100, Winter 2010 Due: Tuesday, January 12, 9:00 am 1. a. Write an equation for the linear demand function that goes through the following points: (P1 = \$100, Q1=4) and (P2=\$80, Q2=12). (NOTE: we will always graph P on the vertical axis and Q on the horizontal axis) b. What is the slope of the demand function? Does the slope of the demand function change depending upon the point at which it is evaluated? Why or why not? c. What is the price elasticity of demand for this demand function, evaluated at the first point given above? Does the elasticity in this case change depending upon the point at which it is evaluated? Why or why not? 2. The price of crude oil per barrel is P (in dollars) and the quantity of oil produced is Q (in millions of barrels per day). The following equations describe the perfectly competitive market for oil. Demand: Q = 85 - .4 P Supply: Q = 55 + .6 P Find the equilibrium price and quantity in this market.

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## This note was uploaded on 01/16/2011 for the course ECN 100A taught by Professor Parman during the Winter '09 term at UC Davis.

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w10_ps1_econ100 - Problem Set 1 Econ 100, Winter 2010 Due:...

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