2. Two trading markets have the following information: Surplus market: Qd = 60 - 1.2P; Qs = 0.8P Deficit market: Qd = 160 – 1.5P; Qs = 20 + 0.5P. If traded volume is 30mt (a) determine the transaction costs (b) each market compute the elasticities of demand and supply in what would be the effect of increasing elasticity of (c) supply in the surplus through technology improvement? what would be the effect of increasing elasticity of (d) demand in the deficit market?

2. Two trading markets have the following information: Surplus market: Qd = 60 - 1.2P; Qs = 0.8P Deficit market: Qd = 160 – 1.5P; Qs = 20 + 0.5P. If traded volume is 30mt (a) determine the transaction costs (b) each market compute the elasticities of demand and supply in what would be the effect of increasing elasticity of (c) supply in the surplus through technology improvement? what would be the effect of increasing elasticity of (d) demand in the deficit market?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 5CQQ: An increase in the supply of a good will decrease the total revenue producers receive if a. the...

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