9. Define elasticity of demand. Suppose, the demand function is Qd = 180 – 2P and supply function is Qs = 5+0.5P. Calculate the price elasticity of demand and supply. Calculate also consumer’s surplus and producer’s surplus.
14. Refer to question no. 9. If the government arbitrarily set the price $80, calculate fictional gain or loss of the industry. Calculate also the deadweight loss, consumer’s surplus and producer’s surplus.
15. Refer to question no. 9. If the government arbitrarily set the price $60, calculate fictional gain or loss of the industry. Calculate also the deadweight loss, consumer’s surplus and producer’s surplus. Note: If
Q9. At equilibrium, Demand is equal to the supply
So Q=180-2*70=180-140=40
The elasticity of Demand is
The elasticity of Supply is
The inverse demand function is given by
The inverse supply function is given by
Consumer surplus is
Producer Surplus is
Q.14. At P=$80
Q=180-2*80=20
Loss of industry is 40-20=20
Deadweight loss is given by
Consumer Surplus is given by
Producer Surplus is given by
Q15. Now P=$60
So Q=180-2*60=180-120=60
Gani in Industry 60-40=20
Deadweight Loss is given by
Consumer Surplus is given by
Producer Surplus is given by
9. Define elasticity of demand. Suppose, the demand function is Qd = 180 – 2P and...
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Suppose the demand equation can be represent as QD = 100 -2P and the Supply equation can be represented as QS = -10 + P. a. Find the equilibrium price and quantity. b. At a price ceiling of $20, what is the QD and QS. What is the deadweight loss, consumer surplus and producer surplus amount?
Deadweight Loss Given the following information: Qs = 2P P = Qs/2 QD= 180 - 4P P = (QD -180)/-4 AR = P = 45-.25Q TR = 45 - .25Q2 Hint: MC – supply curve MR = 45 - 5Q Qs = supply Qd = demand Using the above information, Graph and calculate the price-output solution under competitive market assumptions. How much is the consumer surplus producer surplus and total surplus? Calculate the price and the...
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Suppose that supply and demand are given by the following equations: QD = 40 – 4P and QS = 2p – 2. In the above market, if a price floor of $8.50 was put into place, which of the following would result? A) A shortage of 10 units B) A surplus of 11 units C) Deadweight loss of at least $24 D) An increase in consumer surplus. Why is the Answer C?