w10_ps1_econ100

# Q d indicates quantity demanded and q s indicates

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dollars). Q d indicates quantity demanded and Q s indicates quantity supplied. P = 13.33 0.33Q d P = .2Q s + 10 a. Find the equilibrium price and quantity in this market. b. What is the price elasticity of demand for wheat, at the equilibrium price and quantity? c. Suppose a change in consumer tastes increases the demand for wheat. If this increase takes the form of 100 additional bushels of wheat demanded at every price, write an equation for the new demand function. d. Find the new equilibrium price and quantity following the change described in part c. 4. The following are price-, income- and cross-elasticities of demand: Price elasticity of demand for popcorn = -.20 Price elasticity of demand for coke = -.10 Price elasticity of demand for potato chips= -.15 Income elasticity of demand for coke = .6 Cross-price elasticity of demand for popcorn with respect to (the price of) coke = -.20 Cross-price elasticity of demand for popcorn with respect to (the price of) potato chips = .05 Give the predicted effects of the following (increase/decrease by XX percent) OR, state that there is not enough information given to calculate an effect. a. 10% increase in the price of popcorn on the quantity of popcorn demanded? b. 30% decrease in the price of coke on the quantity of popcorn demanded? c. 5% increase in income on the demand for potato chips d. 10% decrease in income on the demand for coke

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e. In answering parts a through d of this question, is it important to know the prices and quantities from which you are starting? Explain in 2 sentences or less why or why not. 5. Find the derivative of the following expressions with respect to X. a. F(X) = X 2 + 20 X 4 b. F(X) = ln (4X) 13 c. F(X;Y) = 20XY + Y 2 75X, where Y is a constant 6. Does the following demand curve exhibit constant elasticity of demand? If yes, explain how you know this. If not, provide an example that shows the elasticity is not constant. Q d = 100 (P/-2) - 0.5P 2
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