There are two goods, laptops and tablets. The demand for laptops is given by: D₁ = piptyc Where a, b, c are constants, p, is the price of laptops, pr is the price of tablets, Y is income. a) What are likely to be true about a, b, c? b) Calculate the price elasticity of demand for laptops. c) Calculate the Laptops cross price elasticity of demand. d) Comment on (b) and (c).

There are two goods, laptops and tablets. The demand for laptops is given by: D₁ = piptyc Where a, b, c are constants, p, is the price of laptops, pr is the price of tablets, Y is income. a) What are likely to be true about a, b, c? b) Calculate the price elasticity of demand for laptops. c) Calculate the Laptops cross price elasticity of demand. d) Comment on (b) and (c).

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter20: Elasticity: Demand And Supply

Section: Chapter Questions

Problem 13E: Using the following equation for the demand for a good or service, calculate the price elasticity of...

See similar textbooks

Similar questions

The equation for a demand curve is P=483Q. What is the elasticity in moving from quantity of 5 to a quantity of 6?
(Other Elasticity Measures) Complete each of the following sentences: a. The income elasticity of demand measures, for a given price, the __________ in quantity demanded divided by the __________ income from which it resulted. b. If a decrease in the price of one good causes a decrease in demand for another good, the two goods are __________. c. If the value of the cross-price elasticity of demand between two goods is approximately zero, they are considered __________.
Isabella always spends $50 on red roses each month and simply adjusts the quantity she purchases as the price changes. What can you say about Isabella's elasticity of demand for roses?
As the price of good X rises from 10 to 12, the quantity demanded of good Y rises from 100 units to 114 units. Are X and Y substitutes or complements? What is the cross elasticity of demand?
Using the following equation for the demand for a good or service, calculate the price elasticity of demand (using the point form), cross-price elasticity with good x and income elasticity. Q=82P+0.10I+Px Q is quantity demanded, P is the product price. P1 is the price of a related good, and I is income. Assume that P= $10, I = 100, and Px = 20.
If the elasticity of demand for hamburgers equals 21.5 and the quantity demanded equals 40,000, predict what will happen to the quantity demanded of hamburgers when the price increases by 10 percent. If the price falls by 5 percent, what will happen?
Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?
The quantity demanded of good X rises from 130 to 145units as income rises from 2,000 to 2,500 a month. What is the income elasticity of demand for good X?
Jills Sausage Dog Stand projects the following demand for Jills sausage dogs: a. Calculate the price elasticity of demand between 2 and 4. Is demand in this range elastic or inelastic? b. Calculate the price elasticity of demand between 4 and 6. Is demand in this range elastic or inelastic?