1.The demand for widgets, QWD, is equal to QWD = 1879 - 3*PW + 0.003*M, where PW
ID: 1173359 • Letter: 1
Question
1.The demand for widgets, QWD, is equal to QWD = 1879 - 3*PW + 0.003*M, where PW is the price of widgets and M is consumer income. If income equals $65,000 and the price of widgets, PW, is equal to 600, what is the own price elasticity of demand for widgets?2. The demand for widgets, QWD, is equal to QWD = 1879 - 3*PW + 0.003*M, where PW is the price of widgets and M is consumer income. If income equals $65,000 and the price of widgets, PW, is equal to 400, what is the own price elasticity of demand for widgets?
1.The demand for widgets, QWD, is equal to QWD = 1879 - 3*PW + 0.003*M, where PW is the price of widgets and M is consumer income. If income equals $65,000 and the price of widgets, PW, is equal to 600, what is the own price elasticity of demand for widgets?
2. The demand for widgets, QWD, is equal to QWD = 1879 - 3*PW + 0.003*M, where PW is the price of widgets and M is consumer income. If income equals $65,000 and the price of widgets, PW, is equal to 400, what is the own price elasticity of demand for widgets?
1.The demand for widgets, QWD, is equal to QWD = 1879 - 3*PW + 0.003*M, where PW is the price of widgets and M is consumer income. If income equals $65,000 and the price of widgets, PW, is equal to 600, what is the own price elasticity of demand for widgets?
2. The demand for widgets, QWD, is equal to QWD = 1879 - 3*PW + 0.003*M, where PW is the price of widgets and M is consumer income. If income equals $65,000 and the price of widgets, PW, is equal to 400, what is the own price elasticity of demand for widgets?
Explanation / Answer
e = (dQ/Q)/(dP/P)
PW = 600
Qwd = 1879 - 3*600 +0.003*65000 = 274
dQwd/dP = -3
e = dQwd/dP * (Pw/Qwd) = -3*600/274 = -6.569
2)Qwd = 1879 - 3*400 + 0.003*65000 = 874
e = -3*400/874 = -1.373
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