Scribd Logo
Upload

Welcome to Scribd!

  • 1 views

    Elasticity

    Uploaded by

    mairaamjadmughal

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Elasticity

    Uploaded by

    mairaamjadmughal
    1 views10 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1 views10 pages

    Elasticity

    Uploaded by

    mairaamjadmughal

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 10

    ### 1.

    **Price Elasticity of Demand:**


    The price of a product increased from $10 to $12, and as a
    result, the quantity demanded decreased from 100 units to 80
    units. Calculate the price elasticity of demand (Ed).

    **Formula:** Ed= % Change in Quantity Demanded /


    % Change in Price

    ### 2. **Cross Price Elasticity of Demand:**


    The price of good X increases from $5 to $6, leading to a
    change in the quantity demanded for good Y from 50 units to
    55 units. Calculate the cross-price elasticity of demand (Exy)
    between goods X and Y.

    **Formula:**
    Exy= % Change in Quantity Demanded of Y/
    % Change in Price of X
    ### 3. **Income Elasticity of Demand:**
    A consumer's income increases from $50,000 to $60,000, and
    as a result, their quantity demanded for a certain good
    increase from 150 units to 180 units. Calculate the income
    elasticity of demand (Ey).
    **Formula:**
    Ey= % Change in Quantity Demanded/% Change in Income

    ### 4. **Elasticity and Revenue:**


    The price of a commodity decreases by 10%, and as a result,
    the quantity demanded increases by 15%. Calculate the price
    elasticity of demand and determine whether the total revenue
    will increase or decrease.

    ### 5. **Elasticity and Total Expenditure:**


    A product's price increases from $20 to $25. This causes the
    quantity demanded to fall from 500 units to 450 units.
    Calculate the price elasticity of demand and state whether the
    total expenditure on the product increases or decreases.
    ### 6. **Perfectly Elastic Demand:**
    The price of a product remains constant at $8, but the
    quantity demanded rises from 50 units to 150 units. What is
    the price elasticity of demand in this scenario?

    ### 7. **Unitary Elastic Demand:**


    If the price of a good decreases from $15 to $12 and the
    total revenue remains unchanged, what is the
    price elasticity of demand?

    Let me know if you need further explanations or answers to


    any of these questions!

    Here are some numerical questions related to demand, supply,


    and equilibrium:

    ### 1. **Finding Equilibrium Price and Quantity:**


    The demand and supply functions for a product are given as:
    Demand: Qd=100−5P
    Supply: Qs=10+3P
    Where Qd is the quantity demanded, Qs is the quantity
    supplied, and PPP is the price of the product.
    Question:
    Find the equilibrium price and quantity.

    ### 2. **Shifts in Demand and Supply:**


    Initially, the demand and supply equations are:
    - Demand: \( Q_d = 120 - 4P \)
    - Supply: \( Q_s = 40 + 2P \)

    After a new advertising campaign, the demand curve shifts


    to \( Q_d = 140 - 4P \).

    **Question:**
    Find the new equilibrium price and quantity after the shift in
    the demand curve.
    ### 3. **Price Floor and Surplus:**
    The demand and supply functions are:
    - Demand: \( Qd = 90 - 2P \)
    - Supply: \( Qs = 20 + 3P \)

    **Question:**
    If the government sets a price floor at \( P = 25 \), calculate
    the quantity demanded, quantity supplied, and the resulting
    surplus.

    ### 4. **Impact of a Price Ceiling:**


    The demand and supply functions for a commodity are:
    - Demand: \( Qd = 200 - 10P \)
    - Supply: \( Qs = 40 + 5P \)

    **Question:**
    If a price ceiling is imposed at \( P = 10 \), find the resulting
    shortage (i.e., the difference between quantity demanded and
    quantity supplied).

    ### 5. **Market Response to a Tax:**


    The demand and supply curves for a product are:
    - Demand: \( Qd = 150 - 5P \)
    - Supply: \( Qs= 20 + 2P \)
    The government introduces a tax of $5 per unit sold.

    **Question:**
    Find the new equilibrium price and quantity after the tax is
    imposed.

    ### 6. **Elasticity and Equilibrium:**


    The demand and supply curves are:
    - Demand: \( Qd = 300 - 15P \)
    - Supply: \( Qs = 50 + 10P \)
    **Question:**
    Calculate the equilibrium price and quantity. Then, if the price
    elasticity of demand is -1.5 at the equilibrium price, determine
    how a price increase of 10% would affect the quantity
    demanded.

    ### 7. **Excess Supply and Demand:**

    The demand and supply equations for


    a product are:
    - Demand: \( Q_d = 120 - 2P \)
    - Supply: \( Q_s = 40 + 4P \)

    **Question:**
    If the current market price is set at $15, calculate the excess
    supply or excess demand.

    ### 8. **Changes in Supply:**


    The demand and supply equations are:
    - Demand: Qd = 180 - 3P
    - Supply: Qs = 60 + 2P

    After a technological advancement, the supply curve shifts to


    Qs = 90 + 2P.

    **Question:**
    Find the new equilibrium price and quantity after the shift in
    the supply curve.

    ---

    These questions involve various concepts of demand, supply,


    equilibrium, and market interventions. Let me know if you'd
    like further explanations or solutions!

    ### 4. Problem-Solving/Calculations:
    1. Given the following demand and supply equations,
    find the equilibrium price and quantity:
    - Demand: Qd = 200 - 4P
    - Supply: Qs = 50 + 2P

    2. A price floor is set at $15 for a product. If the equilibrium


    price is $10, describe the likely market outcome in terms of
    surplus or shortage.

    3. If the price elasticity of demand for a product is -2.5, what


    will happen to the quantity demanded if the price increases by
    10%?

    4. The price of a substitute good increases by 20%, and as a


    result, the demand for a product increases by 15%. Calculate
    the cross-price elasticity of demand.

    These questions will test a wide range of concepts from the


    chapter on market forces, suitable for both theoretical
    understanding and practical application. Let me know if you'd
    like any more!

    You might also like