Answered: The demand function for a soda is…

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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Question

The demand function for a soda is Q=20-2P , where Q stands for quantity and P for price.

a)Calculate point elasticities at prices of 5 and 9. Is the demand curve elastic or inelastic at these points?

b)Calculate are elasticity at the interval between P=$5 and P=$6.

c)At which price would a change in price and quantity result in approximately no change in total revenue? Why?

d)If the supply function for the soda is Q= -5+3P, calculate the equilibrium price and quantity of soda and show them on a diagram.

e)If the government imposes a floor price of $7, would you think that this floor price is binding.( Show your work on a diagram.)

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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