. ε= = ε –0.500. 1.6 The figure below refers to the graph of a linear inverse demand curve. Demand is elastic for all quantities to the left of the midpoint. At the midpoint, elasticity equals Finally, demand is inelastic for all quantities to the right of the midpoint. –1. 1.7 According to Equation 3.1, the elasticity of demand is (percentage change in  quantity demanded ÷percentage change in price) 3.8% 10% 0.38, which is inelastic. 1.8 Suppose there are countries in the world. Assume the choke prices for countries n areand the corresponding quantities are The demand function, for each country Qi, is as follows: The world demand function is the horizontal sum of demand in each country. The world demand function, in this case, will be a step function: Q As (the number of countries) increases, the world demand curve gets closer to a n linear demand curve. Like a linear demand curve, the world demand becomes more inelastic as you move down along the inverse demand curve. 1.9 The price elasticity of demand is the percentage change in quantity divided by the percentage change in price: = ε . ε= From the demand equation, is So, the price elasticity of demand is –9.5. = ε = 0.335. ε Calculated similarly, is 16.2, so the cross-price elasticity of demand with respect to the price of palm oil is = ε = 0.394. ε 1.10 The income elasticity of demand is the percentage change in quantity divided by the percentage change in income: = ε . ε= From the demand equation, is 0.2. Plugging in 45 cents for 31 cents for and p, pp, 1,275 for and then solving for = $1.5. So, the income elasticity of demand is Q Y, Y = ε = 0.0002. ε
ε= . ε = –0.500. 1.6 The figure below refers to the graph of a linear inverse demand curve. Demand is elastic for all quantities to the left of the midpoint. At the midpoint, elasticity equals –1. Finally, demand is inelastic for all quantities to the right of the midpoint. 1.7 According to Equation 3.1, the elasticity of demand is  (percentage change in quantity demanded ÷percentage change in price) 3.8% 10% 0.38, which is inelastic. 1.8 Suppose there are n countries in the world. Assume the choke prices for countries areand the corresponding quantities are The demand function, Qi, for each country is as follows: The world demand function is the horizontal sum of demand in each country. The world demand function, Q in this case, will be a step function: As n (the number of countries) increases, the world demand curve gets closer to a linear demand curve. Like a linear demand curve, the world demand becomes more inelastic as you move down along the inverse demand curve. 1.9 The price elasticity of demand is the percentage change in quantity divided by the percentage change in price: ε = ε= . From the demand equation, is –9.5. So, the price elasticity of demand is ε = ε = 0.335. Calculated similarly, is 16.2, so the cross-price elasticity of demand with respect to the price of palm oil is ε = ε = 0.394. 1.10 The income elasticity of demand is the percentage change in quantity divided by the percentage change in income: ε = ε= . From the demand equation, is 0.2. Plugging in 45 cents for p, 31 cents for pp, and 1,275 for Q and then solving for Y, Y = $1.5. So, the income elasticity of demand is ε = ε = 0.0002.