Point elasticity as a function of quantity
Problem: The demand equation for a product is given by P =30 - 0.1Q21. Write an equation for the point elasticity as a function of quantity.
2. At what price is demand unitary elastic?
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Ben bakes bread and Shawna knits sweaters. Ben likes to eat bread and wear sweaters, and the same is true for Shawna. In which of the following cases is it impossible for both Ben and Shawna to benefit from trade?
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1. Write an equation for the point elasticity as a function of quantity. 2. At what price is demand unitary elastic?
Retirement of the baby boomers threatens the Social Security system because the number of retirees will be relatively large compared to the number of workers remaining by 2020. What possible actions could offset this effect?
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Suppose that there is a general increase in incomes. Compare the effect of this increase on the demand faced by the following two chains:
1. If you currently hold a market-index portfolio, would you choose to add either of these portfolios to your holdings? Explain.
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