Suppose that the demand curve for wheat in each country is inelastic up to some “ choke” price p*— a price so high that nothing is bought— so that the demand curve is vertical at Q* at prices below p* and horizontal at p*. If p* and Q* vary across countries, what does the world’s demand curve look like? Discuss how the elasticity of demand varies with price along the world’s demand curve.
Answer to relevant QuestionsCalculate the price and cross- price elasticities of demand for coconut oil. The coconut oil demand function (Buschena and Perloff, 1991) is Q = 1,200 – 9.5p + 16.2pp + 0.2Y,where Q is the quantity of coconut oil demanded ...Suppose that a restaurant uses a focus group of regular customers to determine how many customers would buy a proposed new menu item at various prices. Can this information be used to estimate an inverse demand curve? A ...Suppose that you believe that the demand curve is a constant- elasticity demand curve: Q = Apε, where A is a positive constant and e is the constant elasticity of demand. You have some data and want to estimate the ...Give as many reasons as you can why we believe that indifference curves are convex to the origin.Linda loves buying shoes and going out to dance. Her utility function for pairs of shoes, S, and the number of times she goes dancing per month, T, is U(S, T) = 2ST, so MUS = 2T and MUT = 2S. It costs Linda $ 50 to buy a new ...
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