I. Suppose the demand curve for a product is given by Q = 400-2P, and the supply
ID: 1128526 • Letter: I
Question
I. Suppose the demand curve for a product is given by Q = 400-2P, and the supply curve is o-3P-100. Find the equilbrium price and quantity for the product 2. If a 2-percent increase in the price of food causes a 1-percent decline in the quantity demanded, what is the price elasticity of demand? 3 Suppose that a competitive firm's marginal cost of producing output q is given by MC(q)=3+ 29, and the cost function is given by C(q)=q: +39+5. Assume that the market price of the firm's product is 11. 3a. What level of output will the firm produce? 3b. What is the firm's profit? Country A imports good B. The demand for good B is given by the demand curve 0-200-2P, where is quantity and P is the market price per unit of good B. World producers can ship to country A distributors at a constant marginalaverage) cost of $7 per unit. Country A's distributors can in turn distribute good B for a constant $3 per unit Good B market is competitive (price = marginal cost), Congress is considering a tariff on good B imports of $5 per unit 4a. If there is no tariff, how much do consumers pay for a unit of good B? What is the quantity demanded. b. If the tariff is imposed, how much will consumers pay for a unit of good B? What is the quantity demanded. 4c. Caleulate the lost consumer surplus 4d. Calculate the tax revenue collected by the government. ntry A's distributors can in turn distributeExplanation / Answer
Answer (1). We know that at equilibrium demand curve and supply curve intersect each other so that quantity demanded equals quantity supplied.
400-2P = 3P-100
500 = 5P
Equilibrium price (P) = 100
Equilibrium quantity (Q) = 200 units
Answer (2). Price elasticity of demand is equal to the percentage change in quantity demanded due to percentage change in price
Ed = -1/2 = -0.5
Price Elasticity of demand is -0.5 that is inelastic.