VICTORIA UNIVERSITY OF WELLINGTON
SCHOOL OF ECONOMICS AND FINANCE
ECON201
2010
ASSIGNMENT 1
Supply and Demand, Elasticities, Preferences and Utility Functions
This assignment is not assessed, but you must prepare your answers in writing and
bring them to tutorial for discussion. You may be asked at random to answer any of
these questions for the class.
1.
(Perloff Chapter 2, Problem 25) The demand function for movies is
p
Q

=
120
1
for college students and
p
Q
2
120
2

=
for other town residents. What is
the town’s total demand function?
2.
Consider the following demand and supply relationships in the market for golf
balls:
C
P
Q
d
2
2
90


=
and
R
P
Q
s
5
.
2
5
9

+

=
, where
C
is the price of golf
clubs and
R
is the price of rubber.
a.
If
R
= 2 and
C
= 10, calculate the equilibrium price and quantity of golf
balls.
b.
At the equilibrium values, calculate the price elasticity of demand and
the price elasticity of supply.
c.
At the equilibrium values, calculate the cross price elasticity of demand
for golf balls with respect to the price of golf clubs. What does the sign of this
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 Fall '10
 PaulClacott
 Microeconomics, Price Elasticity, Supply And Demand, Utility, total demand function

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