Problem Solving. Given the demand equation for chocolate bars Q = 1,600 – 30OP and the supply equation for chocolate bars Q = 1,400 +700P, Show your solutions. (adapted from Mankiw, 2008) a) Calculate the equilibrium price and quantity in the market for chocolate bars. b) Calculate the price elasticity of demand at the equilibrium price and quantity (using point elasticity formula). c) Calculate the price elasticity of supply at the equilibrium price and quantity. d) If a per unit sales tax is imposed on this market, who will pay a larger share of the tax and why?
Problem Solving. Given the demand equation for chocolate bars Q = 1,600 – 30OP and the supply equation for chocolate bars Q = 1,400 +700P, Show your solutions. (adapted from Mankiw, 2008) a) Calculate the equilibrium price and quantity in the market for chocolate bars. b) Calculate the price elasticity of demand at the equilibrium price and quantity (using point elasticity formula). c) Calculate the price elasticity of supply at the equilibrium price and quantity. d) If a per unit sales tax is imposed on this market, who will pay a larger share of the tax and why?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 13PAE
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Transcribed Image Text:Problem Solving. Given the demand equation for chocolate bars Q = 1,600 – 30OP and the supply equation for
chocolate bars Q = 1,400 +700P, Show your solutions. (adapted from Mankiw, 2008)
a)
3.
Calculate the equilibrium price and quantity in the market for chocolate bars.
b)
Calculate the price elasticity of demand at the equilibrium price and quantity (using point elasticity formula).
c)
Calculate the price elasticity of supply at the equilibrium price and quantity.
d)
If a per unit sales tax is imposed on this market, who will pay a larger share of the tax and why?
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