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Unformatted text preview: Homework 2. Name _______________________________________ Due 9/27/05 1) 10 pts total. 5 points each. a) Find the elasticity of demand between these two points: Point 1: Price = $6, Quantity = 105. Point 2: Price = $4, Quantity = 95. _________________________ b) Find the elasticity of supply between these two points: Point 1: Price = $14, Quantity = 575. Point 2: Price = $16, Quantity = 525. _________________________ 2) 14 pts total . Assume that the elasticity of demand for chicken is 3.00. (Elastic demand example.) a) If supply increases to the point where the equilibrium quantity goes up by 10%, by what percentage will chicken price change? Be sure to say if it rises or falls.(4pt) ___________________________________ b) Graph the supply shift and explain what happens to total revenue (increase, decrease or no change). (10 pts.) 1 3) 14 pts total . Assume that the elasticity of demand for bread is 0.5. (Inelastic demand example.) a) If supply decreases to the point where equilibrium quantity falls by 5%, find the percentage change in bread price? percentage change in bread price?...
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- Fall '08