# Mitchell's equilibrium consumption and own-price elasticity

If a price increase from $5 to $7 causes quantity demanded to fall from 250 to 100, what is the

absolute value of the own-price elasticity at a price of $7?

A)1.75.

B) 5.25.

C) 0.19.

D) 2.15.

Mitchell's money income is $150, the price of X is $2, and the price of Y is $2. Given these prices and

income, Mitchell buys 50 units of X and 25 units of Y. Call this combination of X and Y bundle J. At

bundle J Mitchell's MRS is 2. Given these prices and income, what is Mitchell's equilibrium

consumption of X?

A) X < 50.

B) X = 50.

C) X > 50.

D) X = Y.

https://brainmass.com/economics/demand-supply/mitchell-equilibrium-consumption-own-price-elasticity-372605

#### Solution Preview

If a price increase from $5 to $7 causes quantity demanded to fall from 250 to 100, what is the

absolute value of the own-price elasticity at a price of $7?

A)1.75.

B) 5.25.

C) 0.19.

D) 2.15.

Percentage change in price = (5-7)/7=-.286 or -28.6%

Percentage change in quantity demanded = (250-100)/100=1.5 or 150%

Own price ...

#### Solution Summary

Answers two multiple choice economics problems on price elasticity of demand and equilibrium consumption.