3. Consider a competitive market where the supply and demand curves are given by the following equations: Q° = 25 – 2P Q' = 5P – 3 a) Calculate the price and the quantity sold in equilibrium. Show the supply, the demand and the equilibrium in a graph b) Calculate the consumer surplus, the producer surplus and the total surplus in equilibrium c) Calculate the price elasticity of demand in the equilibrium point. Is it inelastic or elastic? Interpret the result

3. Consider a competitive market where the supply and demand curves are given by the following equations: Q° = 25 – 2P Q' = 5P – 3 a) Calculate the price and the quantity sold in equilibrium. Show the supply, the demand and the equilibrium in a graph b) Calculate the consumer surplus, the producer surplus and the total surplus in equilibrium c) Calculate the price elasticity of demand in the equilibrium point. Is it inelastic or elastic? Interpret the result

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 6PA

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Similar questions

What is total surplus? How is it illustrated on a demand and supply diagram?
Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose from $95 to $105, what would be the elasticity of supply if the quantity supplied changed from a. 38 to 42? b. 78 to 82? c. 54 to 66?
1. Suppose that the smartphone market has the demand equation of P= 1,200 - 3.5Qd and the supply equation of P= 450 + 2.5Qs.a. Find the equilibrium price and equilibrium quantity for this market? b. Draw a graph to show this market and compute for consumer surplus, producer surplus, and market surplus. 2. The right-hand side graph shows the hot dog market. Based on the graph : a. what is price elasticity to demand a hot dog from the price of $4 to $1? b.What is the price elasticity of supply for a hot dogs from the price of $1.5 to 4$?
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14. Given that the U.S. government mandates the use of ethanol as a partial substitute for gasoline (10% by volume), and that ethanol manufactured in the U.S. is made from corn; how will the supply of ethanol, the demand for ethanol, as well as its equilibrium price and quantity, be affected by the following event: Development of new genetically engineered bacteria that can efficiently convert high cellulose biomass (grasses, wood chips, etc.) into ethanol. There will be multiple answers h) Equilibrium Price will increase. e) Supply will decrease. j) Equilibrium Price and Quantity will remain unchanged. d) Supply will increase. c) Demand will decrease. g) Equilibrium Quantity will decrease. f) Equilibrium Quantity will increase. a) To the extent the amount of ethanol additive in gasoline is determined by government fiat, neither demand for not supply of ethanol will be affected unless the government changes…
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