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    hw2 Econ Me

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    مممم ههن
    Used couches are in high demand among freshman in Beta Dormitory. The market reaches equilibrium at a price of $50 with a total consumer surplus of $250 and producer surplus of $100. The cross-elasticity of demand between products A and B is calculated in three cases: substitutes, complements, and unrelated products. Price elasticities are calculated for a product between different price points, finding elastic demand between $11-$9 and $9-$7, and inelastic between $7-$5.

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    hw2 Econ Me

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    مممم ههن
    23 views3 pages
    Used couches are in high demand among freshman in Beta Dormitory. The market reaches equilibrium at a price of $50 with a total consumer surplus of $250 and producer surplus of $100. The cross-elasticity of demand between products A and B is calculated in three cases: substitutes, complements, and unrelated products. Price elasticities are calculated for a product between different price points, finding elastic demand between $11-$9 and $9-$7, and inelastic between $7-$5.

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    hw2 econ me (1)

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    Used couches are in high demand among freshman in Beta Dormitory. The market reaches equilibrium at a price of $50 with a total consumer surplus of $250 and producer surplus of $100. The cross-elasticity of demand between products A and B is calculated in three cases: substitutes, complements, and unrelated products. Price elasticities are calculated for a product between different price points, finding elastic demand between $11-$9 and $9-$7, and inelastic between $7-$5.

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    Download as DOCX, PDF, TXT or read online from Scribd
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    23 views3 pages

    hw2 Econ Me

    Uploaded by

    مممم ههن
    Used couches are in high demand among freshman in Beta Dormitory. The market reaches equilibrium at a price of $50 with a total consumer surplus of $250 and producer surplus of $100. The cross-elasticity of demand between products A and B is calculated in three cases: substitutes, complements, and unrelated products. Price elasticities are calculated for a product between different price points, finding elastic demand between $11-$9 and $9-$7, and inelastic between $7-$5.

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    of 3

    Homework 2

    ECON201 Spring 2022

    Problem 1
    At the beginning of the school year, used couches are in high demand among State University
    freshman living on the sixth floor of Beta Dormitory. Fortunately for the freshman, the
    upperclassmen moving off of the sixth floor are very willing to sell their used couches.
    Answer the following questions about the sixth floor used-couch market.
    (a) Complete the table below containing the market demand for used couches on the sixth
    floor. What is the total consumer surplus?
    Maximum Equilibriu Consumer
    Freshman price willing m price surplus
    to pay
    Rita $100 $50 _50____
    Emily 90 50 ___40__
    Chris 80 50 ___30 __
    Pedro 70 50 __20___
    Zak 60 50 ___10__
    Natalie 50 50 ____0_

    (b) Complete the table below containing the market supply for used couches on the sixth
    floor. What is the total producer surplus?
    Maximum Equilibri Producer
    Upperclass acceptable um price surplus
    man price
    Frank $25 $50 -25_____
    Cho 30 50 ____20_
    Toby 35 50 ____15_
    Susie 40 50 ____10_
    Rob 45 50 ___5__
    Anisha 50 50 ___0__
    Problem 2
    For the following three cases, use a midpoints formula to calculate the coefficient for the cross
    elasticity of demand and identify the type of relationship between the two products.
    (a) The quantity demanded for product A increases from 30 to 40 as the price of product B
    increases from $0.10 to $0.20.
    Coefficient: __0.035____ Relationship: __substitutes______________
    (b) The quantity demanded for product A decreases from 3000 to 1500 as the price of good B
    increases from $5 to $10.
    Coefficient: __-0.027____ Relationship: ___complements_____________
    (c) The quantity demanded for product A remains 400 units as the price of product B
    increases from $25 to $30.
    Coefficient: _0_____ Relationship: ____not related products____________

    Problem 3
    The following data shows the relationship between price and quantity demanded at four different
    prices for a product:
    P = $11, Qd = 16
    P = $9, Qd = 24

    P = $7, Qd = 32
    P = $5, Qd = 40

    Using the midpoints formula, what is the price elasticity of demand between: (a) $11 and $9;
    (b) $9 and $7; (c) $7 and $5?
    a) E=% change in Qd/ % change in P
    Eq= 16-24/(24+16/2)= -0.1
    Ep=11-9/(9+11/2) = 0.05, so E= -0.1/0.05= -2. So elastic.
    b) E=% change in Qd/ % change in P
    Eq= 24-32/(32+24/2)= -0.07
    Ep=9-7/(7+9/2) =0.06, so E= -0.07/0.06=-1.16. So elastic.
    c) E=% change in Qd/ % change in P
    Eq= 32-40/(40+32/2)= -0.05
    Ep=7-5/(5+7/2) =0.08, so E= -0.05/0.08= -0.6. So inelastic.

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