Question

Using the original elasticities of demand and supply​ (i.e.,

Upper E Subscript Upper SESequals=1.5

and

Upper E Subscript Upper DEDequals=minus−​0.5),

calculate the effect of a

3030​-percent

decreasedecrease

in copper demand on the price of copper.

Recall that the demand equation is

Qequals=27minus−​3P,

the supply equation is

Qequals=minus−9plus+​9P,

the initial equilibrium price is

​P*equals=​$3.00

​(dollars per​ pound), and the initial equilibrium quantity is

​Q*equals=18

​(million metric tons per​ year).