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Unformatted text preview: f- Write the constraint(s). g- Write the inequality constraint(s) for the multiplier(s). h- Write the complementary slackness condition(s). i- Find the optimal L and K. Econ 410 Spring, 2010 Baak Altan 2 2- Suppose the market demand for mineral water in the United States is given by I P P Q bw mw mw d 20 5 15 35 where mw P is the price for mineral water, bw P is the price for bottled water, and I is the average consumer income. The market supply curve for mineral water in the United States is given by T P Q mw mw s 5 10 30 where T is the total import tax on mineral water. Assume that 2 I dollars, 3 T dollars and 1 bw P dollar. a- What are the equilibrium price and quantity in this market? b- At the equilibrium values calculate the price elasticity of demand. c- At the equilibrium values calculate the income elasticity of demand. d- At the equilibrium values calculate the cross price elasticity of demand. Good Luck...
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This document was uploaded on 10/28/2011 for the course ECON 410 at UNC.
- Fall '07