Essay
Suppose the current price and quantity of widgets is p = $50 and Q = 125.The demand for widgets is log-linear and the price elasticity of demand is E = -2.The supply of widgets is perfectly elastic.
a.Derive the equations for the demand and supply of widgets.
b.What would be the effect on the equilibrium price and quantity if demand were to increase by 500 widgets?
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a.Because demand is log linear,the deman...View Answer
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