Determining the expenditure on jelly beans

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1. Suppose the demand function for jelly beans in Calgary is linear. Two years ago, the price of jelly beans was $4 per kilogram, and consumers purchased 100,000 kilograms of jelly beans. Last year the price was $6, and consumers purchased 50,000 kilograms of jelly beans. No other factors that might affect the demand for jelly beans changed. What was the elasticity of demand at last year's price of $6? At what price would the total expenditure on jelly beans have been largest?

2. Suppose the annual demand function for the Honda Accord is Qd = 430 - 10PA+ 10PC - 40PG, where PA and PC are the prices of the Accord and the Toyota Camry respectively (in thousands), and PG is the price of gasoline (per litre). What is the elasticity of demand of the Accord with respect to the price of a Camry when both cars sell for $20,000 and fuel costs $0.75 per litre? What is the elasticity with respect to the price of gasoline?

3. The demand for a product is Qd = A - BP, where P is its price and A and B are positive numbers. Suppose that when the price is $1 the amount demanded is 60 and the elasticity of demand is 21. What are the values of A and B? Find A and B if the elasticity of demand is 23.

Reference no: EM131079528

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