Total expenditure is maximized at the price where the absolute value of the elasticity is 1. Hence, look for such that: P = 1 BDP = A BP – BDP + BP = A BP(D + 1) = A P = 2.4 Let the price of a product that is produced using a single input whose Pdenote price is demand function for the product is the supply W.The Qd = 10 -,and function is if if does the equilibrium price Qs = P > Wand Qs = 0 P W.How ≤ depend on is the elasticity of the equilibrium price respect to W?What Pwith Wwhen W = 1? Answer: When quantity supplied is zero. Hence, no exchange takes place between buyers P<W, and sellers.When the equilibrium price is expressed as: P>W, The elasticity of the equilibrium with respect to when = 1 is 0.5. P W W Explanation: Let P>W.
Total expenditure is maximized at the price where the absolute value of the elasticity is 1. Hence, look for P such that: = 1 BDP = A – BP BDP + BP = A BP(D + 1) = A P = 2.4 Let Pdenote the price of a product that is produced using a single input whose price is W.The demand function for the product is Qd = 10 -,and the supply function is Qs = if P > Wand Qs = 0 if P ≤ W.How does the equilibrium price depend on W?What is the elasticity of the equilibrium price Pwith respect to Wwhen W = 1? Answer: When P<W, quantity supplied is zero. Hence, no exchange takes place between buyers and sellers.When P>W, the equilibrium price is expressed as: The elasticity of the equilibrium P with respect to W when W = 1 is 0.5. Explanation: Let P>W.
Solution-Manual-Microeconomics-2nd-Edition-Bernheim.docx