Document Preview:

1 Class: Microeconomics (ECON 2302) Regular 16-Week Session; 12SP Subject: Take-home Assignment #2 Due Date: On the Date of Exam #2 Instructions: Please follow the instructions and show the steps to your answer. Written explanation is expected to be free of grammatical and syntax errors (as much as possible) and NO plagiarism. Arithmetical steps should follow college standards. Graphs, tables, flows and other visual representations should be of good quality and with clear details. It is also important that you show the formula first before deriving any arithmetical results –if applicable. Try your BEST in doing school work –AS ALWAYS! Late homework will not be accepted. IMPORTANT: Write your answers on separate sheets of paper and turn them in with your name and section number on the first page. DO NOT turn in the handout. Problem #1 (10 points) For this problem, please use the midpoint formulas for computing ALL values of elasticity. You also need to write out detailed midpoint formulas with your ending and beginning points. Please show your works. (3 Points) (A) Suppose the price of good X increases from observations #1 to #4. What is X’s price elasticity of demand? (3 Points) (B) Suppose the price of good Z increases from observations #1 to #3. What is Z’s price elasticity of supply? (4 Points) (C) Suppose the price of good X increases from observations #4 to #5. What is the coefficient of cross-price elasticity of demand of goods X and Z? Using the numeric values in the above table, prove that X and Z are substitutes. ======================================================================= Problem #2 (10 points) Please fill in the cells with appropriate values and show a few steps of calculations –along with the formulas.
2 Problem #3 (10 points) Cost per unit (dollars) 0 Quantity of output (units per hour)MC ATC 1 100 AVC 90 80 70 60 10 2 3 4 5 6 7 8 20 30 40 50 (4 Points) (A) Refer to the above diagram. When the market price is $70.00, what are the estimated…