2 8 3
Consider the following weekly supply and demand tables for product X:
P Qd Qs
2 8 3
3 7 4
4 6 5
5 5 6
6 4 7
7 3 8
8 2 9
9 1 10
10 0 11
a. Draw the supply and demand curves on the same diagram. Determine the equilibrium price and quantity numerically and demonstrate graphically.
b. On the same diagram, show the new equilibrium P & Q when Supply and demand has each decreased by 1.
c. On the same diagram relying the original data, demonstrate the impact of the government price controls set at P = 5.
d. Calculate the Elasticity of Demand when Price moves from $7 to $6. Is demand elastic or inelastic in this price range? Why?
e. Recalculate the Price Elasticity of Demand, but this time use the mid-point formula.
f. Create a new numerical column next to the demand for Total Revenue , (TR = P X Q). Redraw the demand curve in one diagram and another diagram RIGHT BELOW the first diagram. Draw the demand curve in the first diagram and the Total Revenue curve in the second diagram. Identify the elastic and inelastic ranges of the demand curve based on its relation with the total revenue changes. Identify the Elastic and Inelastic ranges of the demand curve, based on the demand relationship with Revenue change.
g. Calculate, and also graphically demonstrate the Consumer Surplus, when price is $4.00
h. Suppose a 2o% increase in the Consumer Income has resulted in a 30% decrease n demand for a product. How do you evaluate Income Elasticity of demand? Is the demand for this product income elastic or income inelastic? Is this product a normal good or an inferior good? Demonstrate and explain
Answers: 1
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Consider the following weekly supply and demand tables for product X:
P Qd Qs
2 8 3
2 8 3
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