Exponential Demand Functions

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
(No Transcript)
5
Price Elasticity of Demand
6
Cross Price Elasticity of Demand
7
Income Elasticity of Demand

• We can not compute the income elasticity of
  demand for good X without knowing whose income
  has changed.

8
If price of X doubles
9
If Mr. Pauper loses his job and his income falls
by 50
10
If Ms. Richs income drops by 50
11
If the government imposes a 100 percent tax on Y
12
If IPIBIAIR25
13
If IPIBIAIR25 and PX doubles
14
If IP or IR drops by 50
15
If Ms. Rich finds Z a necessary complement to X
16
Price Elasticity of Demand, ex, Px
17
Cross Price Elasticity of Demand
18
Cross Price Elasticity of Demand
19
Cross Price Elasticity of Demand