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Question: consider the following supply and demand curves for batteries q...

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Consider the following supply and demand curves for batteries: Q S B = 10 + 8PB + 7PC Q D B = 100 − 4PB − 2PC where PB is the cost of batteries and PC is the cost of copper.

a) Determine the equilibrium price and quantity for batteries (P ∗ B and Q∗ B) in terms of the variable PC .

b) Using comparative statics, discuss how the equilibrium P ∗ B and Q∗ B changes as PC increases and decreases.

c) Determine the price elasticity of supply and price elasticity of demand as a function of PB and PC .

d) Let PC = 2, for what values of PB is the price elasticity of demand elastic, unitary elastic, and inelastic?

e) Determine the cross-price elasticity of demand for batteries with respect to the price for copper, εQD B ,PC , what can we say about copper and batteries (demand substitutes or complements)?

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