In the market for hand sanitizers the demand function is given by: q = 80 -p, where q is the quantity of hand sanitizers (in thousands) and p is the price of hand sanitizers in dollars. Suppose the current market price for hand sanitizers is $4. 1. What is the inverse demand function equal to? Draw it in a diagram. 2. At a price of $4, what is the level of consumer surplus? 3. Due to the unprecedented COVID-19 pandemic, people's preferences for sanitizing their hands change in favor of hand sanitizers. In fact, for any given price of hand sanitizers, people now want to purchase 20 units (in thousands) more hand sanitizers. o What is the new demand curve? o What is the new inverse demand curve? o Draw the new inverse demand curve in your diagram.
In the market for hand sanitizers the demand function is given by: q = 80 -p, where q is the quantity of hand sanitizers (in thousands) and p is the price of hand sanitizers in dollars. Suppose the current market price for hand sanitizers is $4. 1. What is the inverse demand function equal to? Draw it in a diagram. 2. At a price of $4, what is the level of consumer surplus? 3. Due to the unprecedented COVID-19 pandemic, people's preferences for sanitizing their hands change in favor of hand sanitizers. In fact, for any given price of hand sanitizers, people now want to purchase 20 units (in thousands) more hand sanitizers. o What is the new demand curve? o What is the new inverse demand curve? o Draw the new inverse demand curve in your diagram.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter4: Markets In Action
Section: Chapter Questions
Problem 14SQ
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![In the market for hand sanitizers the demand function is given by: q = 80 - p, where q is the quantity of hand
sanitizers (in thousands) and p is the price of hand sanitizers in dollars. Suppose the current market price for hand
sanitizers is $4.
1. What is the inverse demand function equal to? Draw it in a diagram.
2. At a price of $4, what is the level of consumer surplus?
3. Due to the unprecedented COVID-19 pandemic, people's preferences for sanitizing their hands change in
favor of hand sanitizers. In fact, for any given price of hand sanitizers, people now want to purchase 20
units (in thousands) more hand sanitizers.
o What is the new demand curve?
o What is the new inverse demand curve?
o Draw the new inverse demand curve in your diagram.
4. Suppose that after the increase in demand, the new price becomes $8. What is consumer surplus equal to
at this new price (and with the new inverse demand curve)?
5. [Challenge Question] What would the consumer surplus be if the government decided to implement both a
quota equal to 50 units of hand sanitizers and a price ceiling of $4. Draw this scenario in your diagram and
then calculate the new consumer surplus.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F04c291c3-b5f3-44f9-94d9-068de8214981%2Fc4403af9-0085-43a4-b3b4-107cda2c3b36%2Fk809q8j_processed.png&w=3840&q=75)
Transcribed Image Text:In the market for hand sanitizers the demand function is given by: q = 80 - p, where q is the quantity of hand
sanitizers (in thousands) and p is the price of hand sanitizers in dollars. Suppose the current market price for hand
sanitizers is $4.
1. What is the inverse demand function equal to? Draw it in a diagram.
2. At a price of $4, what is the level of consumer surplus?
3. Due to the unprecedented COVID-19 pandemic, people's preferences for sanitizing their hands change in
favor of hand sanitizers. In fact, for any given price of hand sanitizers, people now want to purchase 20
units (in thousands) more hand sanitizers.
o What is the new demand curve?
o What is the new inverse demand curve?
o Draw the new inverse demand curve in your diagram.
4. Suppose that after the increase in demand, the new price becomes $8. What is consumer surplus equal to
at this new price (and with the new inverse demand curve)?
5. [Challenge Question] What would the consumer surplus be if the government decided to implement both a
quota equal to 50 units of hand sanitizers and a price ceiling of $4. Draw this scenario in your diagram and
then calculate the new consumer surplus.
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