Demand: P 160 - 0.02 Q Supply: P= 60 + 0.03 Q Given the following: a) Find the initial equilibrium. b) assume there is a 50% increase in supply (i.e. if you had n firms, you now have 1.5 times n firms). Find the new equilibrium. For what (Q.P) is the elasticity of demand equal to -2?

Demand: P 160 - 0.02 Q Supply: P= 60 + 0.03 Q Given the following: a) Find the initial equilibrium. b) assume there is a 50% increase in supply (i.e. if you had n firms, you now have 1.5 times n firms). Find the new equilibrium. For what (Q.P) is the elasticity of demand equal to -2?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 20SQ

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Question

Given the following:
Demand: P = 160 - 0.02 Q
Supply: P= 60 + 0.03 Q
a)
Find the initial equilibrium.
b) assume there is a 50% increase in supply (i.e. if you had n firms, you now have 1.5
times n firms). Find the new equilibrium.
c)
For what (Q.P) is the elasticity of demand equal to -2?

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