First you need to find the quantity demanded at the price of $1.00. Q=10-2(1+210. Price elasticity of demand 006-2)=-品=02 P△O Crosprice elasticity of demand= 4=60=02 Suppose the price of the good,P,goes to $2.00.Now what is the price elasticity of demand?What is the cross-price elasticity of demand? First you need to find the quantity demanded at the price of $2.00. Q=10-22+2=8. Price elasticity of demand= 6-6-2=-05 P△Q」 Cro-price elasticity ofdemand=(025 12.Suppose that rather than the declining demand assumed in Example 2.8,a decreas e in the cost of co production causes the ply curve to shift to the right by 40 percent.How will the price ofcopper change If the supply curve shifts to the right by40%then supplied will be 140 perent of the old quantity supplied at every price. The new supply curve is therefore Q=1.4*(-4.5+16P)=6.3+22.4P.To find the new equilibrium price of copper,set the new supply equal to demand so that-6.3+22.4P=13.5-8P. Solving for price results in P=65 cents per pound for the new equilibrium price.The price decreased by 10cents per pound,or 13.3% 13.Suppose the demand for natural gas is perfectly inelastic.What would be the effect,ifany,of natural gas price controls? If the demand for natural gas is perfectly inelastic.then the demand curve is vertical.Consume price this quantity the quantity demanded. First you need to find the quantity demanded at the price of $1.00. Q=10-2(1)+2=10. Price elasticity of demand = P Q Q P = 1 10 (−2) = − 2 10 = −0.2. Cross-price elasticity of demand = Ps Q Q Ps = 2 10 (1) = 0.2. b. Suppose the price of the good, P, goes to $2.00. Now what is the price elasticity of demand? What is the cross-price elasticity of demand? First you need to find the quantity demanded at the price of $2.00. Q=10-2(2)+2=8. Price elasticity of demand = P Q Q P = 2 8 (−2) = − 4 8 = −0.5. Cross-price elasticity of demand = Ps Q Q Ps = 2 8 (1) = 0.25. 12. Suppose that rather than the declining demand assumed in Example 2.8, a decrease in the cost of copper production causes the supply curve to shift to the right by 40 percent. How will the price of copper change? If the supply curve shifts to the right by 40% then the new quantity supplied will be 140 percent of the old quantity supplied at every price. The new supply curve is therefore Q’ = 1.4*(-4.5+16P) = -6.3+22.4P. To find the new equilibrium price of copper, set the new supply equal to demand so that –6.3+22.4P=13.5-8P. Solving for price results in P=65 cents per pound for the new equilibrium price. The price decreased by 10 cents per pound, or 13.3%. 13. Suppose the demand for natural gas is perfectly inelastic. What would be the effect, if any, of natural gas price controls? If the demand for natural gas is perfectly inelastic, then the demand curve is vertical. Consumers will demand a certain quantity and will pay any price for this quantity. In this case, a price control will have no effect on the quantity demanded