The following graph will represent U.S. dollars on the y-axis and lbs. on the x-
ID: 2494551 • Letter: T
Question
The following graph will represent U.S. dollars on the y-axis and lbs. on the x-axis.
Good X
18) Refer to the figure above. Calculate the price elasticity when less consumers enter the market of Good X by 3 lbs.
A) EpD = 1.39
B) EpS = 1.39
C) EpD = 0.94
D) EpS = 0.94
19) From number 18 (point B), calculate the price elasticity when technology is introduced in Good X leading to an increase of 1 lb.
A) EpD = 0.82
B) EpS = 0.82
C) EpD = 1.22
D) EpS = 1.22
20) From number 19 (point C), calculate the price elasticity when more producers enter the market of Good X leading to an increase of 3 lbs.
A) EpD = 1.68
B) EpS = 1.68
C) EpD = 0.60
D) EpS = 0.60
21) From number 20 (point D), calculate the price elasticity when consumers expect price to increase tomorrow for Good X leading to an increase of 3 lbs.
A) EpD = 2.31
B) EpS = 2.31
C) EpD = 0.43
D) EpS = 0.43
12 So 101 8 6 4 2 Do 5 10 15Explanation / Answer
Multiple questions asked.
Q1 is answered below.
Market equilibrium P=$7 and Q=8 units.
When less consumers enter the market, making Q=8-3 = 5 units, then P becomes $4 (DD shifts to the left today)
Thus, Price elasticity of demand = (Change in Q/Change in P)(P/Q)
Price elasticity = (8-3)/(7-4)×(7/8)
Price elasticity = 1.45
Thus, correct option: (A) EpD = 1.39 (approx)
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