Tute_3answers - Introductory microeconomics ECON1001_2010...

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1 Introductory microeconomics ECON1001_2010 Tutorial 3 Week 4 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. Q * = 300, P * = 4; Elasticity: Demand = 4/3 abs; Supply = 4/3 abs. 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. P = a –bQ: E D = 1- (a/b) x (1/Q) Q = c – dP: E D = 1 – c/Q b) Calculate the elasticity of demand for each of the following functions at Q = 100; 500; 900. (i) Q = 1800 – P E D = (1 – 1800/Q) = 17abs; 2.6abs; 1abs (ii) P = 60 – 0.5Q E D = (1 – 120/Q) = 0.2abs; 0.76abs; 0.867abs c) Given the demand function P = 60 – Q 2 , calculate the price elasticity of demand at P = 44. E
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This note was uploaded on 08/18/2011 for the course ECON 1001 taught by Professor - during the Three '07 term at University of Sydney.

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Tute_3answers - Introductory microeconomics ECON1001_2010...

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