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Exponential Demand Functions

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Exponential Demand Functions. The following demand function is an exponential demand function:. Exponential Demand Functions. This exponential demand function exhibits constant elasticities:. Problem 7.1, page 188.

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Exponential Demand Functions

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  1. Exponential Demand Functions The following demand function is an exponential demand function:

  2. Exponential Demand Functions This exponential demand function exhibits constant elasticities:

  3. Problem 7.1, page 188 a. The market demand function for X is the sum of the demands of the four participants: For i= 1 (Pauper),2 (Broke),3 (Average), and 4 (Rich).

  4. Price Elasticity of Demand

  5. Cross Price Elasticity of Demand

  6. Income Elasticity of Demand We can not compute the income elasticity of demand for good X without knowing whose income has changed.

  7. If price of X doubles:

  8. If Mr. Pauper loses his job and his income falls by 50%:

  9. If Ms. Rich’s income drops by 50%:

  10. If the government imposes a 100 percent tax on Y:

  11. If IP=IB=IA=IR=25:

  12. If IP=IB=IA=IR=25 and PX doubles:

  13. If IP or IR drops by 50%:

  14. If Ms. Rich finds Z a necessary complement to X:

  15. Price Elasticity of Demand, ex, Px

  16. Cross Price Elasticity of Demand

  17. Cross Price Elasticity of Demand

  18. Cross Price Elasticity of Demand

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