Question

You did not receive full credit for this que Suppose you have the information shown in the table below about the quantity of a good supplied and demanded at various prices Price (S) Quantity demanded Quantity supplied 180 50 40 30 20 140 100 60 20 40 20 10 60 80 a. Draw the demand and supply curves from the data provided. Instructions: Use the tools provided (D1 and S1) to plot the demand curve (5 points total) and the supply curve (5 points total) Price (S) 707 65. 60- 55- 50 45- 40- 35 30- 25- 20 15- 10 5- 20 40 100 120 140 160 180 200 60 80 Quantity

Answer 1

(a) Graph is correctly drawn.

(b) Equilibrium is at intersection of D1 and S1 with price 20 and output 60.

(c) Graph is correctly drawn.

(d) After tax, quantity is 40. Consumers will pay 30. Producers will receive 15.

(e) Elasticity of demand = (Change in Q / Average Q) / (Change in price / Average price)

= [(40 - 60) / (40 + 60)] / [(30 - 20) / (30 + 20)]

= (- 20 / 100) / (10 / 50)

= - 1

(f) If demand were less elastic, deadweight loss would be smaller.