URI EEC105 Module 2 PDF

Preview

Summary

All of equations where on the module 2 ! took and I left notes on how to solve each problem...

Description

2.1 Supply and Demand: Choke price

Question What is the choke price for this demand curve? P = 186 - 12Q

Solution The choke price for a demand curve, P = a - bQ, is always a. Since your demand curve was P = 186 - 12Q, the choke price is 186.

Solution: 186

2.2 Supply and Demand: Shutdown price

Question What is the shutdown price for this supply curve? P = 68 + 19Q

Solution The shutdown price for a supply curve, P = f + cQ, is always f. Since your supply curve was P = 68 + 19Q, the shutdown price is 68.

Solution: 68

2.3 Supply and Demand: Max demand

Question If the good is free, what is the maximum quantity demanded by a consumer with this demand curve? P = 114 - 0.2Q

Solution The maximum quantity demanded is always a/b, which can be solved by finding the xintercept. Since your demand curve was P = 114 - 0.2Q, the maximum quantity is 570.

Solution: 570

2.4 Supply and Demand: Relative elasticity

Question Which of these curves is more elastic? 1. D: P = 245 - 3Q 2. S: P = 175 + 5Q Enter 1 or 2 as your answer.

Solution The more elastic curve is the one which is flatter. Since b = 3 and c = 5, the demand curve is flatter, so the solution is 1.

Solution: 1

2.5 Supply and Demand: Q from P (demand)

Question Given a demand curve of P = 8 - 0.1Q, find the quantity corresponding to p = 6.

Solution We solve by plugging the price into P = 8 - 0.1Q and solving for q. In this case, we have 6 = 8 - 0.1q, so the solution is q = 20.

Solution: 20

2.6 Supply and Demand: Q from P (supply)

Question Given a supply curve of P = 3Q, find the quantity corresponding to p = 24.

Solution We solve by plugging the price into P = 3Q and solving for q. In this case, we have 24 = 3q, so the solution is q = 8.

Solution: 8

2.7 Supply and Demand: P from Q (demand)

Question Given a demand curve of P = 406 - 5Q, find the price corresponding to q = 40.

Solution These problems can be solved by plugging in the quantity to P = 406 - 5Q and solving for p. In this case, we have p = 406 - 5×40, so the solution is p = 206.

Solution: 206

2.8 Supply and Demand: P from Q (supply)

Question

Given a supply curve of P = 5 + 3Q, find the price corresponding to q = 2.

Solution These problems can be solved by plugging in the quantity to P = 5 + 3Q and solving for p. In this case, we have p = 5 + 3×2, so the solution is p = 11.

Solution: 11...