Examine the elasticity of the demand curve along line segment EC.

AL AIN UNIVERSITY OF
SCIENCE AND TECHNOLOGY

COLLEGE OF BUSINESS
ADMINISTRATION

PRINCIPLES OF
MICROECONOMICS

FALL 2015/2016

ASSIGNMENT 1 (DUE ON
WEDNESDAY 21 OCTOBER 2015)

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1.
Refer to the information provided
in Figure 5.2 below to answer the questions that follow using both point and
midpoint formulas..

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Figure 5.2

a. If the
price of a hamburger is increased from $8 to $10, compute the price elasticity
of demand.

b. If the
price of a hamburger is increased from $6 to $8, compute the price elasticity
of demand.

c. If the
price of a hamburger is increased from $2 to $4, compute the price elasticity
of demand

d.
At Point Cthe price elasticity of
demand is -1. Examine the elasticity of the demand curve along line segment EC.

2.
Ahmad consumption from fish is
4 Kg per month when his income is AED 15,000. His consumption from fish rises
to 6 Kg as his income rises to AED 18000. Compute the income elasticity for
Ahmad’s demand.

3.
If the cross-price elasticity of demand
between fish and chicken is 2, find the percentage change in quantity of
chicken if the price of fish is increased by 2.