Question

Suppose the market demand curve for a product is given by QD=100-5P and the market supply...

Suppose the market demand curve for a product is given by QD=100-5P and the market supply curve is given by QS=5P

a. What are the equilibrium price and quantity?

b. At the market equilibrium, what is the price elasticity of demand?

Suppose government sets the price at $15 to benefit the producers.

  1. What is the quantity demanded?
  2. What is the quantity supplied?
  3. What is the amount of the surplus?

Suppose market demand increases to Qd=200-5P.

  1. What is the new equilibrium price?
  2. What is the new equilibrium quantity?
  3. At this new market equilibrium, what is the own-price elasticity of demand?
  4. Has demand become more or less elastic at this new elasticity?

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