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Kuis Mikro1 2 Sol
Kuis Mikro1 2 Sol
Name: ........................
NIU: ........................
See the explanation given in the example in section 15.2 on adding up "linear" demand curves pp. 272-273.
2. Show how we arrived at this expression
|ϵ(p)| < 1
when we define ∆R = q∆p + p∆q.
Divide ∆R = q∆p + p∆q by ∆p
∆R ∆q
=q+p .
∆p ∆p
∆q
To obtain q + p ∆p > 0 we need to rearrange the inequality to
∆q
p > −q
∆p
p ∆q
> −1
q ∆p
ϵ > −1
−ϵ < 1
|ϵ| < 1.