10. Elasticities Essay 1.What is damage pushover of crave? Describe the terce ranges of walkover and their relationship to marginal revenue. Problems 2.Given appropriate information, calculate the turn monetary value, income, and cross-price elasticities of collect and identify. 3.Given appropriate information, calculate the point price, income, and cross-price elasticities of accept and identify. hurt Elasticity of Demand When a firm is opinion near setting its price, the responsiveness of measuring makeed to price is rattling(prenominal) important. The practice of law of withdraw states that if the relative price of a heavy rises, the sum of money demanded falls. But by how more? If the amount buyers are commensurate and resulting to buy is very responsive to changes in the erects price, then buyers result purchase much less. If it isnt very responsive, then they will buy about the identical amountonly a little bit less. The consideration used in economic science to refer to this responsiveness is elasticity. Price elasticity of demand is the percent change in quantity demanded divided by the percent change in the goods price. There are cardinal measures of elasticity. Arc price elasticity of demand Ep= Q2 Q1/P2 P1 * P2+P1/Q2+Q1 read/write head Price elasticity of demand Ep = first derivative of the demand function * P/Q Qd=65060-20P derivative = -20 point price elasticity of demand function = -20P/Q envisage the price is 2753. Using the demand function, quantity is 10,000. The point price elasticity of demand is: Ep = -20 * P/Q = -20 * 2753/10,000 = -5.51 If you are given two prices and the associated quantities demanded, then the arc elasticity of demand can be calculated: P Qd d 249,500 550248,500 Ep = (249,500 248,500)/(500-550) * (500+550)/(249500+248 500) = 1000/-50 * 1050/498,0! 00 = -20 * .002108 = -.04217 If you are meet given two prices and a demand function, arc...If you want to push a full essay, station it on our website: OrderCustomPaper.com
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