Homework 2.
Name _______________________________________
Due 9/26/05
1)
8 points total.
Quantitydemanded = 300 – 3 * Price
and Quantitysupplied = 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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 Fall '08
 Duffy,P
 Supply And Demand, $14, $16, $5, $6

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