Question

GoodA Q(units) Use the above graph to answer the following questions. 1) What is the price elasticity of demand over the price range of 19 and 21? (use the midpoint method) 3 points) 2) Will a price increase from 19 to 21 result in an increase in revenue or a decrease in revenue? (2 point) 3) Given: Cross Price elasticity of demand (between good A and good B) is -4, and the price of good decreases by 5% and the price of the above good remains constant at $19. What quantity will consumer of good A demanded? (5 points) 4) Draw in the appropriate curve on the above graph that represents the shift which results from the change in income. (4 points)

Answer 1

point is 10 price elasticity of demand by med giren by! - IPED - Ora x (Pitt) (ething (PvBJ - pobo & (19+21) lootto 1 (lt) 19-21 IPED & - 27 Sirice the dormend is elastic because IPEDI so Rellence and price will move in the oppesite direction here prie increased from $19 to $21 So Revenue will decrease Decrease

Cross price elasticity of demand is given by, CPED good A / Charge in quentity derreach of 1. Charge in price of good 18 -4- 2 x - 4 94 peut Bosto 19 - 4X-0.95 19 - 30 $ 22.9 = 0.2 22-4, 2 0.29, 2 = 1.29 I The will be 201.) increase of quantity derraad of good A.

47 Since income determinent is of one of the determitent despord So then Core if the income throuares it will shift the desword to the Right 8 (8) Į D2 word Shift from Pito Dz