Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows:Price $Demand mlnSupply mln60221480201610018181201620 Calculate the price elasticity of demand when the price is $80 and when the price is $100.Calculate the price elasticity of supply when the price is $80 and when the price is $100.What are the equilibrium price and quantity?Suppose the government sets a price ceiling of $80. Will there be a shortage or a surplus, and if so, how large will it be?

Answer: (1). The formula for price elasticity of demand is given below: ED=△Q△P×PQWhere,△Q=change in…

Answered: Consider a competitive market for which…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows:

Price $	Demand mln	Supply mln
60	22	14
80	20	16
100	18	18
120	16	20

Calculate the price elasticity of demand when the price is $80 and when the price is $100.
Calculate the price elasticity of supply when the price is $80 and when the price is $100.
What are the equilibrium price and quantity?
Suppose the government sets a price ceiling of $80. Will there be a shortage or a surplus, and if so, how large will it be?

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