The following table gives the current price, quantity, and price elasticities of the linear demand curves for pencils, paper and scissors. The columns E_rc under the Price Elasticities heading are calculated as E_rc = (
)
. The terms r and c refer to the row of the table and the column under the price elasticities heading, respectively. For example, if r is one and c is two, the value E₁₂ is the responsiveness of pencil demand to changes in the paper price (i.e., a cross-price elasticity). The demand curves for each good are in the form Q_r = a_r + b_rP₁ + c_rP₂ + d_rP₃ . Using the information in the table, derive the demand curve for each good.

Question

The following table gives the current price, quantity, and price elasticities of the linear demand curves for pencils, paper and scissors. The columns E_rc under the Price Elasticities heading are calculated as E_rc = (

)

. The terms r and c refer to the row of the table and the column under the price elasticities heading, respectively. For example, if r is one and c is two, the value E₁₂ is the responsiveness of pencil demand to changes in the paper price (i.e., a cross-price elasticity). The demand curves for each good are in the form Q_r = a_r + b_rP₁ + c_rP₂ + d_rP₃ . Using the information in the table, derive the demand curve for each good.

Quizplus · Accepted Answer

The Answer of The following table gives the current price, quantity, and price elasticities of the linear demand curves for pencils, paper and scissors. The columns E_rc under the Price Elasticities heading are calculated as E_rc = ( ) . The terms r and c refer to the row of the table and the column under the price elasticities heading, respectively. For example, if r is one and c is two, the value E₁₂ is the responsiveness of pencil demand to changes in the paper price (i.e., a cross-price elasticity). The demand curves for each good are in the form Q_r = a_r + b_rP₁ + c_rP₂ + d_rP₃ . Using the information in the table, derive the demand curve for each good.

The Following Table Gives the Current Price, Quantity, and Price