Microeconomics

Q-3 (a). When the price of Airline tickets from Vancouver to Edmonton decreased from $1000 to $542, the quantity of tickets demanded rises from 1000 to 1500. Use the arc elasticity formula to calculate the price elasticity of demand. Express the nature of demand. Q)-3 (b). If the coefficient of elasticity is 2.1, then how much quantity demanded will increase as a result of 17% fall in price? Q-4. Following table shows the total demand for corn and the total supply of corn per month in a Saskatoon grain market: Demonstrate your answer graphically. (a) Suppose the government establishes a price ceiling of $5.50 per tonne of corn. What will be the main effects of this price ceiling? (b) Suppose the government establishes a price floor of $3.50 per tonne of corn. What will be the main effects of this price floor? Quantity Price of Quantity $ Demanded Corn Supplied per per year ($/ year (million (million tonne) tonnes) tonnes) 220 $6.00 100 240 5.50 360 Price 260 5.00 120 280 4.50 180 300 1.00 320 3.50 200 340 3.00 160 0 Quantity