Question

Question 2. The market supply and demand curves for a product are:

QS=0.5P (supply curve)

QD=60–2P (demand curve)

where Q is the quantity of the product and P is the market price.

(1). Calculate the equilibrium price, equilibrium quantity and total social welfare. (10 points)

(2). Suppose that the market has changed from a perfectly competitive market to a monopoly market, calculate the new price–output combination and the total deadweight loss in the monopoly market. (10 points)

Answer #1

The market demand curve for a product is given below: QD = 250 –
0.5P
(1) Assume that the market is supplied by a monopolist with a
constant unit cost equal to $100. Calculate the equilibrium price
and quantity.
(2) Now assume that the market is supplied by perfectly
competitive firms and that the market supply curve is perfectly
elastic at a price equal to $100. Calculate the equilibrium price
and quantity.

A market is described by the following supply and demand
curves:
QS = 2P
QD = 400 - 3P
Solve for the equilibrium price and quantity.
If the government imposes a price ceiling of $70, does a
shortage or surplus (or neither) develop? What are the price,
quantity supplied, quantity demanded, and size of the shortage or
surplus?
If the government imposes a price floor of $70, does a shortage
or surplus (or neither) develop? What are the price, quantity...

1. Consider a demand curve of the form QD = 40 - 2P, where QD is
the quantity demanded and P is the price of the good. The supply
curve takes the form of QS = -4 + 2P, where QS is the quantity
supplied, and P is the price of the good. Be sure to put P on the
vertical axis and Q on the horizontal axis. a. What is the
equilibrium price and quantity? Draw out the supply...

1. The market demand and supply was given as follow: Qd = 10 –
2P Qs = -5 + 3P
a) Compute for the Price equilibrium
b) Compute for the Quantity equilibrium
c) Plot/graph the following equation.
2. Given the equation, find the equilibrium price and quantity
of the following market and plot the equation. 13P – Qs = 27 Qd +
4P – 24 = 0

The demand and supply curves for a good are given by QD = 50 –
2P and QS = P – 1.
Calculate the price elasticity of demand at the equilibrium
price.
Calculate the price elasticity of supply at the equilibrium
price.
What would happen to consumer expenditures on the good if firms
must pay higher prices for their inputs in production?

Let the market demand curve be QD=8-P
and the market supply curve be QS=P. Let
price P be measured in $/unit and let quantity Q
be measured in singular units (i.e. simple count).
Solve for the equilibrium price P* and
quantity Q*.
Now, assume the government imposes a $2/unit tax on consumers,
which leads to wedge/gap between the buyers’ price
Pb and the sellers’ price
PS.
Rewrite the demand and supply curves using Pb
and PS, respectively.
Write down the...

The corn market is perfectly competitive, and the market supply
and demand curves are given by the following equation: Qd
=50,000,000 – 2,000,000 p Qs = 10,000,000 +5,500,000 p Where Qd and
Qs are quantity demanded and quantity supplied measured in bushels,
and P= price per bushel.
1) Determine consumer surplus at the equilibrium price and
quantity.

1. Suppose the demand for village defense in Temeria is
Qd=300-2P, and the supply is Qs=4P.
a. Graph the supply and demand curves. (3 points)
b. Solve for the equilibrium price and quantity. Show this point
on your graph from part (a). (5 points)
c. How much consumer surplus is created in this market? How much
producer surplus? (4 points)
d. Suppose the King of Temeria puts a tax of 10 orens per unit
on village defense. Write an equation...

Consider the following supply and demand functions qD= 8-p qS=
-4 +2p Assuming the market is distortion free, what is the total
welfare level? W= ??

Consider a market for beer with a demand curve which is: Qd = 25
- 2p and a supply curve which is: Qs = 3P
a) Find the equilibrium price and quantity. Suppose that the
government decided they wished to levy a $2 tax on suppliers.
b) Find the new price paid by the consumer and the price
received by the seller.
c) Based on the tax sharing burden by both the consumer and the
seller, comment on the relative...

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