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Could use help with these, no time limit, just would like help. Thanks Questions 1-5 concern the following demand function of an individual for good
Could use help with these, no time limit, just would like help. Thanks
Questions 1-5 concern the following demand function of an individual for good 1: Q1 2 30 + 161131 + 16239: + 1331?: +134? where g, is the amount of good 1 consumed, p1, p2 , 155 are the prices of goods 1, 2, and 3, respectively, and Yrepresents the income of a person. Note that the amount consumed (ql ) depends not only on its own price, but also on how much money a person has (Y) and also how much it would cost to buy goods other than good 1. The betas ( l, g, 133, ,64) are parameters that stand in for real numbers that could be a negative number, positive number, or zero. 1. (3 points) Take the partial derivative of 9'1 with respect to p1 , that is, calculate: % P1 Explain in words what this tells us (hint: make a sentence that starts out: When the price of good 1 rises by one unit, ___.) What sign (+, , or 0) do you expect the partial derivative to have? 2. [3 points) 1 Take the partial derivative of q, with respect to p2 , that is, calculate: a = 2 Explain in words what this tells us. If good 1 consumption rises when the price of good 2 rises, what sign does the partial derivative to have? What does this imply about goods 1 and 2? 3. [3 points) Take the partial derivative of 9'1 with respect to F, that is, calculate: % = Explain in words what this tells us. What sign do you expect the partial derivative to have? 4.42 points) Write out the formulae for the own price elasticity, that is, a formula that calculates the percentage change in 9'1 for a 1% rise in p1 , all else held equal. 5. 42 points) Questions 5-6 concern the market for grass seed which can be expressed as: demand curve: QD=100-3p, and supply curve: Qg=2p. What is the price and quantity at equilibrium? 6. \"1:3 points) Suppose that the government now imposes a specic tax of 5 to be paid by consumers. This means that consumers now pay p + 5 while producers receive p. Calculate these new prices. What fraction of the tax is paid by consumer versus producers? That is, nd the tax incidence in which consumers pay XfZ of the tax while sellers pay Yr'Z of the tax. (Hint: compare the new prices to the original price that was common to both parties; your job is to nd X, Y, and Z.)Step by Step Solution
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