Question

Please show all steps and double check your work.

In a market: MV = 50 - 5*Q MC = 10 + 2*0 Question 1 What is elasticity of demand at equilibrium? Question 2 If the price rose to $23.45 How much would total revenue change by? Suppose the market demand curve changed to MV = 40 - 3.25*Q Question 3 What is elasticity of demand at equilibrium? Question 4 If the price rose to $23.45 How much would total revenue change by?

Answer 1

MV =so - sa Demand equation p=Sorso, supply equution P =10+20 In Equilibrium Demand = supply So-SQ = 10 +2a SQ +2Q - so-lo 72 = no Q = 40 demand equeation a = 5.71 units. substituting a into P = so-sx 5.7 p=50-28.57 p = $21.42 P = so-sao S.QD = so - P

२) = so-P ८ २D = 10 - 0.2P र =७ - ०-२(1) 20.2 45 --०.२ २.42 S. ____- -५. २84 5.71 E= - 0.75 २) तर = १.२ = २१-५२ *5.71 = १२२, 306 when p=23:45 २) = 10 -0.2 (23.45 ) 10 - ५.७१ = S.31

I TR₂ = Pr. Qq - 23.05 45.31 = $ 124.si change in TR = TR - TRI = 124051 - 122.308 = 2.211 New Demand function p=40 -3.25 a New Equilibrium Das 40-3.25 Q = 10+2 Q no-10 = 22 +3.25Q 30 =5.25Q 3.25 Sube P = 5.714 go into equation P=4o-3.25 (5.714) price (demand)

P = no - 18.571 p=21142 p = 40 – 3.25 Q 3.25 2 = 40 -P a = no 25 - 3.25 3.25 2 = 12.307 -0.307 p = 0 -0.307(1) =-0-307 = -0.307 * 21.42 R s . 714 S.714 Ed = – 10153 (1) Tri = P, Q, = 21.02* S.714

L TR1 = 122.393 & when p = 23.us substituting p into demand equati PM-3 Q = 13.307 -0.327 (23.05 ) Q = 12.307 –7.199 a=s.lo7 TR₂ = P2 - Q2 = 23.08 x .107 =119.779 ATR = T₂ - TRI = 119.779 -122.393 = -2,613 TR decreases by 2.6133