The following are market demand and supply equations for baked beans: QD = 80 − 6P QS = 20 + 6P where, P is price in £ (UK pounds), QS and QD are quantity supplied and demanded of the product,respectively. 1. Draw the demand and supply curves for prices £0, £1, £2 … £8. 2. Suppose consumers’ income increases and baked beans are considered as inferior As a result, the new demand equation is QD = 60 − 6P. Find the new equilibrium price and quantity of baked beans. 3.Your economist friend told you that because of the change in demand, price elasticity ofdemand for baked beans Is your friend right? Explain. 4. Use the demand equation in part (2) to compute the price elasticity of demand between £5 and £6. Use the mid-point (arc)

The following are market demand and supply equations for baked beans: QD = 80 − 6P QS = 20 + 6P where, P is price in £ (UK pounds), QS and QD are quantity supplied and demanded of the product,respectively. 1. Draw the demand and supply curves for prices £0, £1, £2 … £8. 2. Suppose consumers’ income increases and baked beans are considered as inferior As a result, the new demand equation is QD = 60 − 6P. Find the new equilibrium price and quantity of baked beans. 3.Your economist friend told you that because of the change in demand, price elasticity ofdemand for baked beans Is your friend right? Explain. 4. Use the demand equation in part (2) to compute the price elasticity of demand between £5 and £6. Use the mid-point (arc)

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section: Chapter Questions

Problem 1WNG

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