Scribd
Upload
8 views2 pages

Ex 4

Uploaded by

hoaanhtucdoc1314
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
8 views2 pages

Ex 4

Uploaded by

hoaanhtucdoc1314
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Ex4

a,

Chart Title
Price
600

500

A
400

300

200

100
Apartments
0
750 800 850 900 950 1000 1050 1100 1150 1200 1250

Qd Qs

The intital demand equation is: P=a-bQd

As Epd=Qp’.P/Q

-> Epd=(a-bQd)’.P/Q <->Epd=-b.P/Q <->b=P/Q.Edp ->b=400/1000x1=0,4

(P=a-bQd) ->
a=800

 The intital demand equation is :Pd =800-0,4Qd

Similarly, the intital supply equation is Ps=-400+0,8Qs

+) Pe=Pd=Ps -> 800-0,4Qd=-400+0,8Qs-> Qe=1000 (apartments)

-> Pe=800-0,4x1000=400 (USD)

c)Following b, suppose that an increase in college enrollment is expected to


increase the demand for apartments in college town by 15 percent.

->the percentage change in equilibrium price =15%/(1.0+0.5)=10%


-> the new equilibrium price of apartments is 400x110%=440 (USD)
-> The new demand equation is : 1.1Pd=800-0.4x0.15Qd

<->Pd=800/11—3/55Qd

a. Use demand and supply curves to show the initial equilibrium, and label the equilibrium point a

c. Predict the effect of the increase in demand on the equilibrium price of apartments.

You might also like