Re: SAU 2013 paper

Posted by Homer Simpson on Apr 02, 2014; 10:51am
URL: http://discussion-forum.276.s1.nabble.com/SAU-2013-paper-tp7585948p7585950.html

Hey, thanks for the reply. I thought of 5 like this -

It could possibly be either (b) or (d).

If we have a linear downward sloping demand curve in form y = ax+b, where a= = -1.5 (for instance) slope may be constant but elasticity is actually -1.5(y/x). Thus (b) is not possible if price elasticity is given at constant value.

But if we have non-linear demand curve, say y = 1.5/x , then elasticity is constant at 1.5

Also, would 26 be (a) or (c) ? Doesnt perfect competition have "perfect info" and "free entry and exit" ? How did you get (a) for question 1?