... = 32 .18 - 0.51P
S
C
= 7.78 + 0.29P.
As above, E
S
= 0.4 and E
D
= -0 . 4: E
S
= d(P*/Q*) and E
D
= -b(P*/Q*), implying 0.4 =
d (18 /13 ) and -0 .4 = -b (18 /23). So d = 0.29 and b = 0. 51.
Next ... equated with short-run and long-run demand, so that:
18 .74 + 0.07P = 24.08 - 0.06P,
implying that P = $ 41. 08 in the short run; and
14 .78 + 0.29P = 32 .18 - 0.5...
... she buys the 8-ounce soft drink she pays
$1. 50
8 oz
= $0 .19 per oz.
When
she buys the 12 -ounce size she pays $0 .17 per ounce, and when she buys the 1 6-
ounce size, she pays $0 .14 per ounce. ... in 19 90. In 19 95, 600 clothing and 600 food
would cost ($3)(600)+($2)(600)=$3000.
Therefore, the Laspeyres cost-of-living index is:
L = 10 0($3000/ $12 00) = 250.
Ideal Index...
... to area a.
Numerically:
a = ( 21. 5 -1 9.2) (14 .6)+ (17 . 4 -1 4.6)( 21. 5 -1 9.2)(.5)=36.8
b = (17 . 4 -1 4.6)( 21. 5 -1 9.2)(.5)=3.22
c = ( 21. 5 -1 9.2)(20. 4 -1 7.4)=6.9
d = ( 21. 5 -1 9.2)( 21. 1- 2 0.5)(.5)=0.69.
These ... price will be $12 per pound
and demand is Q=25 0 -1 0 (12 ) =13 0 million pounds.
b. Calculate the lost consumer surplus.
The lost consumer surplu...