Question

7. Suppose the inverse demand equation for rental apartments is P = 2000 – Q and the inverse supply equation for rental apartments is P=Q. Suppose there's a policy that restricts the price (monthly rental) to not exceed $1200. Which of the following statement is correct? A. The market equilibrium price will be $1200. B. There will be no excess demand or excess supply. C. There will be an excess demand of 400 units. D. There will be an excess supply of 400 units. 8. Suppose the inverse demand equation for unleaded gasoline is P = 16 – 2Q, and the inverse supply equation is P=0.50, where P is per gallon price. The government decides to impose a $1 excise tax on gas. Gas stations file the tax. How much does a consumer pays for each gallon in equilibrium after the imposition of tax? How much does a gas station get for each gallon sold? A. Gas station gets $4 per gallon, consumer pays $3 per gallon. B. Gas station gets $3 per gallon, consumer pays $4 per gallon. C. Gas station gets $3 per gallon, consumer pays $3 per gallon. D. Gas station gets $4 per gallon, consumer pays $4 per gallon. 9. The demand curve for a good is Q = 120 - 3P. What is the point elasticity of demand when P = 10? A. The point elasticity of demand is -1/3 B. The point elasticity of demand is -1/2 C. The point elasticity of demand is -1/4 D. The point elasticity of demand is -1/5 10. A study found that the elasticity of demand for Google Play apps is –2. This elasticity applies to a small college town where approximately 1,000 apps per month are sold. If price is increased by 4%, what would be the effect on revenue? A. The revenue will rise by roughly 8%. B. The revenue will rise by roughly 4%. C. The revenue will fall by roughly 8%. D. The revenue will fall by roughly 4%.

Answer 1

7) Demand Supply function: Q = 2000-P function Qs =P 200k ----mar rental Limit Price 1 equilibrium point, 2000-p=P => 1 P=1000 1Q=1000 - | ODD DL6 ou uantity so clearly, demand an excess supply. will be no excess There