Economics 106
Managerial Economics
Assignment 1
Fall 2010
Due date: Fri, Nov 12 at the beginning of class. Follow the homework guidelines as posted on
the webpage (see http://econ.ucsb.edu/~benelli/homework_guidelines.htm).
Round all answers to 2 decimals.
1.
A firm has estimated the following inverse demand function.
P = 0.1Q + 14
or graphically,
at $4, Q=100
at $6, Q=80
a. Using percent changes, calculate the elasticity from A to B.
b. Using percent changes, calculate the elasticity from B to A.
c. Using the arc price, calculate the elasticity from A to B.
d. Using the arc price, calculate the elasticity from B to A.
e. Using price point elasticity, calculate the elasticity at A.
f. Using price point elasticity, calculate the elasticity at B.
$6
$4
P
80
100
A
B
Q
1
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View Full Document2.
A firm has estimated the following demand function.
Q
x
= 0.1Px
2
+ 14Py + I
Let P
y
= 1 and I=60
a. Using percent changes, calculate the elasticity from $15 to $18.
b. Using percent changes, calculate the elasticity from $18 to $15.
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 Fall '08
 Sengupta,J
 Economics, Supply And Demand, McDonald, price point elasticity

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