Answer in Microeconomics for Ebenezer #180435
March 27th, 2023
. A town of 2,000 households constitutes a market for eggs. Current sales are 2400 dozen eggs per week at a price of $1.25 per dozen. 1200 households living on the west side of the river buy1600 dozen eggs and their elasticity of demand is -1.5. The remaining households live on the east side of the river, buy the rest of the eggs and have an elasticity of demand of -3. Calculate the elasticity of market demand curve for the town as a whole.
“800times 1.25=1000”
“1200times 1.25 = 1500”
“(1000u22121500)times [frac{1000+15000}2]times 100”
“=frac{u2212500}{1250}times 100”
“800u22121200=u2212400”
“800+1200 = 2000”
“frac{-400}{2000}times*100 = -20”
“frac{-20}{40} = -0.5”
PED of market demand curve for the town as a whole = -0.5
