Apologize for the bad cropping, please answer the questions pertaining to the gr

Question

Apologize for the bad cropping, please answer the questions pertaining to the graph, explanations would be nice too so I can understand what is happening! Thanks in advance!

EC301PS1 . The graph heloa shoaws the effeets of huri Charlry, Frans, ad lnrine on the priee and number of boxes of Florida oragcs bought and sold eT yenr, Comsider tho linear demand curve for orangithe grapb 150 242 Boxcs per year millions) a.What is the deand fction? b) Whatseesticity of demand at a pri of $.peox c). What is the elasticity cf demand at price cl $3.49 per box? d). At whiat price will otlexet largest? Chapter 3. Bancing Benelits and Costs 1. Suppe yu can heaecianic to work ci you earlor neger ner o hours for up to six h. The total henefits and total eots are shomm in Tahle1. What is your bost choice? O lype hene to search

Explanation / Answer

a) We can find the demand function using the points lying on the demand curve . Use points (x,y) = (3.49, 150) and ( 2.35, 242)

Slope of demand function = (P2-P1)/(Q2 –Q1)

Slope = (3.49- 2.35)/(150- 242) = -0.0123

Equation

(P-2.35) = -0.0123*(Q -242)

P = 2.35 – 0.0123Q + 0.0123*(242)

P = 5.33 -0.0123Q is the demand function.

b) Elasticity of demand = (dQ/dP) *(P/Q)

= -(81.3)*(2.35/242) = - 0.79

c) Elasticity of demand = (dQ/dP) *(P/Q)

= -(81.3)*(3.49/150) = - 1.89

d) Total expenditure with price = 2.35 will be ( 2.35*242) = 568.7

With price = 3.49 will be (3.49* 150) = 523.5. So expenditure is higher at Price = $3.49

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