In Country Faraway, cigarettes are forbid,so people trade cigarettes in a black m The cigarette demand is QD = 12 − P , and the cigarette supply is Qs = 2P      (a) Find the equilibrium price and quantity in the black market      (b)If a price of 7 and 2 were charged what is the excess demand or supply at the given prices?

Economics For Today
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ISBN:9781337613040
Author:Tucker
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Chapter14: Environmental Economics
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1. In Country Faraway, cigarettes are forbid,so people trade cigarettes in a black m The cigarette demand is QD = 12 − P , and the cigarette supply is Qs = 2P

     (a) Find the equilibrium price and quantity in the black market

     (b)If a price of 7 and 2 were charged what is the excess demand or supply at the given prices?

 

2.Explain Production possibility frontier with an example and give explanation on why it is represented as a curved diagram(concave)

 

3. If the price falls from 6 to 4, the quantity demanded rises from 8000 to 12000.

a) Calculate the price elasticity of demand

b) What happens to turnover (Price * Quantity) due to the price change?

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