# Exponential Demand Functions - PowerPoint PPT Presentation

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## Exponential Demand Functions

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### Exponential Demand Functions This exponential demand function exhibits constant ... Price Elasticity of Demand Cross Price Elasticity of Demand Income ... – PowerPoint PPT presentation

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Title: 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