Tute_3 - Introductory microeconomics ECON1001_2010 Tutorial...

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ECON1001 Tutorial 3 1 Introductory microeconomics ECON1001_2010 Tutorial 3 Week 4 (Includes a few practice questions with answers) 1. The demand and supply of widgets is described by the following functions: Q D = 700 -100P Q S = -100 +100P Represent the demand and supply model in (Q, P) space diagram. Calculate the equilibrium quantity and price of widgets. Suppose the advent of computers improves production of widgets. How would the supply function be affected? Calculate the equilibrium price elasticity of demand and supply. 2. a) For the demand functions, (i) P = a –bQ, (ii) Q = c – dP, derive expressions for price elasticity of demand in terms of Q only. b) Calculate the elasticity of demand for each of the following functions at Q = 100; 500; 900. (i) Q = 1800 – P (ii) P = 60 – 0.5Q c) Given the demand function P = 60 – Q 2 , calculate the price elasticity of demand at P = 44. 3. Calculate the cross-price elasticity for the following goods. Are they substitutes or complements? a) The price of movie theatre tickets goes up by 10 percent, causing the quantity demanded for video rentals to up by 4 percent. b)
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This note was uploaded on 06/10/2011 for the course ACCT 1002 taught by Professor Angela during the Three '10 term at University of Sydney.

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Tute_3 - Introductory microeconomics ECON1001_2010 Tutorial...

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