# Project #83127 - Microeconomics help

1. Mathematical Exercise: Consider the following demand curve for apples.

 Price (in dollars) Quantity (in Bushels) 10 1 9 2 8 3 7 4 6 5 5 6 4 7

a) Find the price elasticity of demand between the prices \$8 and \$9. Is the demand curve elastic at this point? If so, why? If not, why not? What happens to revenue if the price falls from \$10 to \$9? Why?
b) Repeat (a) when the prices are between \$5 and \$4.

2. Descriptive Exercise: Consider the following pairs of goods. Discuss which of them has a higher (in absolute value) elasticity and why.
a) Oil in the short run versus oil in the long run.
b) Food (as a whole product) versus vacations.
c) Harry Potter novels versus other fantasy novels.
d) Medicine versus chewing gum.

3. Graphical and Mathematical Exercise: Consider a person A, who is extremely thirsty. His maximum willingness to pay chart is given below.

 Glasses of water Maximum willingness to pay 1st glass \$10 2st glass \$6 3st glass \$3 4st glass \$1

From his fifth glass onwards, A is not willing to pay any money.

a) Construct A’s demand curve from the above information. (Put the # of glasses demanded on the x-axis, and the price of a glass of water on the y-axis.)
b) Suppose the price charged for a glass of water is \$4/glass. How many glasses will A buy? Calculate (and show in a graph) A’s consumer surplus from this transaction.

 Subject Business Due By (Pacific Time) 09/23/2015 12:00 pm
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