Question

1. Suppose that the supply and demand schedules for pizza in the ABC campus are as follows: QUANTITY DEMANDED (slices/week) 1000 PRICE QUANTITY SUPPLIED (TL/slice) (slices/week) 200 400 600 800 1000 a) Find the equilibrium price and quantity of pizza 600 400 200 b) Find the price elasticity of demand at equilibrium and indicate whether it is elastic, unit-elastic, or inelastic. c) Find the price elasticity of supply at equilibrium and indicate whether it is elastic, unit-elastic, or inelastic.

Answer 1

(a) Equilibierum. price and quantity are obtained - Where quantity supplied and quantity demanded . are equal : so, in the above table. Quantify demanded and quantify supplied are equal at tpeerce - 3) where quantiffy demanded and supplied Bere is 600 units/week. im price : 3 and quantity = 60ounts

LO I o) 0 Pecice elasticity of dexanded= + sd x 1 where d = fucoutify.at equilibirium. P Pecice at equilibirium. od= diod (di is quantity before d) DP = Pop (Pi is perice before p) 80, di = 800 ; d =.600 & D d = 800-600 - 200 Gud aud P, = 2; p=3 »DP =-1. -1 b po While indicating elasticity we ignore signs' 1. So, elasticity of demand is einf-elastto

(e) elasticity of supply & es so x O4 = de- d = 400-6002 -200 DP= 2-3 = -1 es 7200 x El tot um son peuce elasticity at equilibrium for supply - it is unit -elastic

X = 142 - 5 px - î -3.5Pu Cown puice i I demand function) = a) when Î = 25 and Py = 12 demand cuwe : 142-5Px - 25 -3.5812 .142 - 5 px - 25 -42 = 142 - 25-42-52x. Idemand Cuawer 75 - 5px 1 houx 6) By using demand cuure above quantity of good & whee. Px = 10 X = 75 -5610) = 15-50 1x = 25 uuts at Px =10)
the above images shows the solution for Q1 (a,b,c) and Q2 (a,b)