0:00
Hello everyone.
00:01
So first part of the question says that at the market price of $4, the quantity of lemon grass demanded is 1 ,500 per month and the quantity demanded does not read zero until the price reaches $30 per pound.
00:15
Draw a graph showing this data, calculate the total consumer surplus in the market for lemon grass and show the consumer surplus on the graph.
00:22
So as you can see over here, i have already made the graph over here.
00:29
Now calculating, as you can, as you can, see the yellow area that is triangle abc is showing the consumer surplus now we'll show the calculation of consumer surplus so consumer surplus is equals to half 1 by 2 multiplied by 15 minus 0 multiplied by 30 minus 4 multiplied by 10 to the power 2 which on solving gives 1 by 2 multiplied by 1500 multiplied by 26 so it will be 1500 multiplied by 13 so this gives 19 ,500 coming to the next part that says it was part two and this is part so this will be suppose your income is four thousand dollars per month and you buy two powerball tickets two dollar each per month when your income increased to five thousand dollars per month you started buying 10 tickets per month to calculate the income elasticity of demand for power ball tickets so income elasticity of demand is equals to percentage change in quantity demanded divided by percentage change in income now percentage change in quantity demanded is equals to 10 minus 2 divided by 10 plus 2 divided by 2 multiplied by 100 so we get 800 multiplied by 2 divided by 12 so we get 133 .33 that is using the midpoint formula now again percentage change in income will be to 5 ,000 minus 4 ,000 divided by 5 ,000 plus 4 ,000 divided by 2 multiplied by 100.
04:10
So in solving we get 100 ,000 multiplied by 2 divided by 9 ,000 so we get 22 .22%.
04:31
Now income elasticity of demand will be 133 .3 .3 .3...