7/25/2019 Intermediate Micro Hw 1 - Bhavik Mody

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Bhavik ModySeptember 25, 2015

Intermediate MicroeconomicsHomework 1

Professor !ar" Storchmann

#$ %osh&a '()onne""

1*$ss&min+ that P5, ca"c&"ate the price e"asticity of demand for the fo""owin+ demandf&nctions

a- . 5 / "nP-P) d.ddP- 3 P.-. 5 4 "nP-d.ddP /1PP) /1P- 3 P5/"nP--P) /15- 3 55/"n5--

PED = -1/(5-ln(5))

b- . 2000 4 0*5P

P) d.ddP- 3 P.-. 2000 4 0*5P

d.ddP / 1*5P2

P) /1*5P2- 3 P2000/0*5P-P) /1*55-2- 3 52000/0*55--P) /167*5187*5PED = -3/31

c- . 12/P-

2

P) d.ddP- 3 P.-. 12/P-2

d.ddP 212/P- 3 /1-d.ddP /29 : 2PP) /29 : 2P- 3 P12/P-2-P) /29 : 25-- 3 512/5-2-P) /19- 3 598-PED = -10/7

d- . 2PP) d.ddP- 3 P.-. 2Pd.ddP /2P2

P) /2P2- 3 P2P--P) /252- 3 525--P) /225- 3 509-PED = -1

7/25/2019 Intermediate Micro Hw 1 - Bhavik Mody

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2* ;onsider a competitive market for which the 60 each* @sedbooks cost on"y >50 each* Ahen the bookstore anno&nces that there wi"" be a 10increase in the price of new books and a 5 increase in the price of &sed books, ?arry(sfather offers him >90 e=tra*

5* Sophie has a week"y income of >200 that she a""ocates amon+ two +oods meat andpotatoes*

C* Hans receives &ti"ity from cons&min+F and C as +iven by the &ti"ity f&nctionUF,C-FC* In addition, the price of D is >2 per &nit, the price of ; is >10 per &nit, and Hans(week"y income is >50*

7. S&ppose yo&r &ti"ity f&nction is +iven as @=,y-5=y* Eo&r income is e