In Example 2.8, we examined the effect of a 20-percent decline in copper demand on the price of copper, using the linear supply and demand curves developed in Section 2.6. Suppose the long-run price elasticity of copper demand were -0.80 instead of -0.50. Assuming, as before, that the equilibrium price and quantity are P* = $3 per pound and Q = 18 million metric tons per year, derive the linear demand curve consistent with the smaller elasticity. With a long-run price elasticity of -0.80, the linear demand curve is OA. Q=33.40-4.80P. OB. Q=32.40-6.80P. OC. Q=33.40+ 6.80P. OD. Q 32.40-4.80P. OE. Q=32.40 + 4.80P.

In Example 2.8, we examined the effect of a 20-percent decline in copper demand on the price of copper, using the linear supply and demand curves developed in Section 2.6. Suppose the long-run price elasticity of copper demand were -0.80 instead of -0.50. Assuming, as before, that the equilibrium price and quantity are P* = $3 per pound and Q = 18 million metric tons per year, derive the linear demand curve consistent with the smaller elasticity. With a long-run price elasticity of -0.80, the linear demand curve is OA. Q=33.40-4.80P. OB. Q=32.40-6.80P. OC. Q=33.40+ 6.80P. OD. Q 32.40-4.80P. OE. Q=32.40 + 4.80P.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 6E

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