Question: In Example 2.8 (page 52), we discussed the recent increase in world demand for copper, due in part to Chinas rising consumption. a. Using the

In Example 2.8 (page 52), we discussed the recent increase in world demand for copper, due in part to China’s rising consumption.
a. Using the original elasticities of demand and supply (i.e., ES  1.5 and ED  0.5), calculate the effect of a 20% increase in copper demand on the price of copper.
b. Now calculate the effect of this increase in demand on the equilibrium quantity, Q*.
c. As we discussed in Example 2.8, the U.S. production of copper declined between 2000 and 2003. Calculate the effect on the equilibrium price and quantity of both a 20% increase in copper demand (as you just did in part a) and of a 20% decline in copper supply.

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a The original demand is Q 27 3 P and supply is Q 9 9 P as shown on page 51 The 20 increase in deman... View full answer

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