The equation for the original demand curve is Q=50-6.25P. Find the new demand eq
ID: 1167411 • Letter: T
Question
The equation for the original demand curve is Q=50-6.25P. Find the new demand equation when demand increases by 20% (Round to one decimal place). Q=___ - ___P
The supply curve for the product is Q=-10+12.5P. Find the original equilibrium price and quantity using the above demand curve. P =___ and Q=___.
Find the new equilibrium price and quantity after demand increases 20%. P= ___ Q=___ (Round to 2 decimal places) .
Calculate the price elasticity of demand and the price elasticity of supply at the new equilibrium (ie, use demand curve. Price elasticity of demand is _____. Price elasticity of supply is _____.
Explanation / Answer
New demand curve= Q+0.2*Q= 120/100[ 50-6.25p]
Q =60-7.5P
At equlibrium demand equals to supply
therefore price= 3.2 and quantity = 30
new equlibrium price and quantity at increased demand
-10+12.5P = 60-7.5P
q= 33.75 , p= 3.5
Elasticity of demand = dq/dp*p/q
= 7.5*3.5/33.75
=0.77
elasticity of supply = dq/dp*p/q [dq/dp is taken from supply curve]
12.5*3.5/33.75
=0.95787
1.29
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