hwork2-fall-2006

# hwork2-fall-2006 - Homework 2 Due Name 1 8 points total...

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Homework 2. Name _______________________________________ Due 9/26/05 1) 8 points total. Quantity-demanded = 300 – 3 * Price and Quantity-supplied = 100 + 2 * Price Solve for Price and Quantity at Equilibrium. 2) (6 points total, 3 points each) If the price of shrimp is \$4 a pound, consumers buy 1000 pounds a day. If the price increases to \$5 a pound, the quantity demanded falls to 900 pounds per day. a) Starting from the initial point, calculate the elasticity of demand _______________ b) Is demand elastic or inelastic at this point? ________________________________ 3) (6 points total, 3 points each) If the price of beef is \$2.50 a pound, consumers buy 600 pounds a day. If the price falls to \$2.00 a pound, the quantity demanded rises to 1000 pounds per day. a) Starting from the initial point, calculate the elasticity of demand _______________ b) Is demand elastic or inelastic at this point? ________________________________ 4) Fill in the blanks (12 points total, 2 pts each) : a) If the elasticity of supply is 1.5, a 1% increase in price will cause a _________________ in quantity supplied. b) If the elasticity of supply is 6.0, a 5% decrease in price will cause a ________________ in

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hwork2-fall-2006 - Homework 2 Due Name 1 8 points total...

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