Supply and Demand and Question

Summer-2013 - ECON 201 [section - A] Assignment # 2 Part (I) - Market Demand Question # 01: If the market demand curve is D ( p ) = 100 − 0.5 p , what is the inverse demand curve?

Question # 02: An addict 's demand function for a drug may be very inelastic, but the market demand function might be quite elastic. How can this be? Question # 03: If D ( p ) = 12 − 2 p , what price will maximize revenue?

Question # 04: Suppose that the demand curve for a good is given by D( p) = 100 maximize revenue?

p . What price will

Question # 05: If consumer 1 has the demand function D1( p ) = 1000 − 2 p and consumer 2 has the demand function D 2( p ) = 500 − p ; then what will be the aggregate demand function for an economy? Question # 06: If the demand curve is a linear function of price ( D ( p ) = a − bp ), then what will be the price elasticity of demand at various points of the curve? Question # 07: If the elasticity of demand curve for Rice is -0.40 at all prices higher than the current price, we would expect that when bad weather reduces the size of the Rice crop. What will happen with the total revenue of Rice producers?

Question # 08: What will happen to the total revenue of the producer with price increase, if (i) (ii)

Ep > 1 ,

Ep < 1 , (iii) Ep = 1 .
1 . Ep

Question # 09: The relation between marginal revenue and price elasticity is MR = 1 − Diagrammatically explain that what will be the value of marginal revenue, if (i)

Ep > 1 , (ii) Ep < 1 , (iii)

Ep = 1 .
Question # 10: How could u interpret the results of income elasticity and cross price elasticity as an economist? What sort of information you perceive, if (i)

Ey > 0 , (ii) Ey < 0 , (iii) 0 < Ey < 1 , (iv)

Ecp < 0 , and Ecp > 0 ?
Question # 11: If Qx = 5000 − 1000 Px + 0.1I + 100 Py and Px = 1 ,

I = 20000 and Py = 0.80 then:
Monday, July 15, 2013

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Calculate the own-price elasticity and comment whether the price of x commodity will be increased or decreased in