Question

5. If the equilibrium quantity of quinoa produced in Peru is 250 million lb and the equilibrium price of quinoa is $2.25/lb, by how much would the quantity supplied change if the price dropped by 60% given a quinoa supply elasticity of 0.25?

ANSWER:

6. In the week before the Superbowl, guacamole cost $5.55/package and 10,255,500 packages were purchased. This week the price has gone down to $4.44/package. How many packages of guacamole will be supplied today if the price elasticity of guacamole supply is 0.5?

ANSWER:

7. Assume that advertising shifts the demand curve for Coca-Cola to the right along the supply curve which pushes the Coca-Cola price up by 45%. If the old equilibrium price of Coke was $1.33/liter bottle and the old equilibrium quantity is 13,360.0 million liter bottles, the elasticity of Coca-Cola supply is 0.50 and the elasticity of demand is -1.83, what is the new equilibrium quantity demanded of Coca-Cola? What is the new equilibrium quantity supplied? (HINT: Be careful! Think about it.)

ANSWER: _

8. Assume that bad weather shifts the supply curve for papayas along the demand curve to the left which increases the papaya price to $1.06/papaya. If the original equilibrium price of papayas is 53cents/papaya and the original equilibrium quantity is 22,535,300 papayas, the elasticity of papaya supply is 1.15 and the elasticity of demand is -0.15, what is the new equilibrium quantity demanded of papayas? What is the new equilibrium quantity supplied? (HINT AGAIN: Be careful! Think about it.)

ANSWER:

9. The average price of gasoline in Texas in January 2018 was about $2.248/gallon and the Texas consumption of gasoline that month was 40.555 million gallons. The average price of gasoline in Texas was about $2.354/gallon last month (January 2019). The elasticity of Texas gasoline demand is -0.22. By how much did gasoline consumption in Texas change between January 2018 and last month? What was Texas gas consumption last month?

ANSWER:

10. The government has implemented a new policy to support the price of chickpeas at $12.81/cwt. (A cwt means “hundred weight” or 100 pounds but that is not important for the answer). If the chickpeas market equilibrium price is $10.55/cwt, the equilibrium quantity of chickpeas is 69.432 million cwt, the elasticity of supply is 0.25, and the elasticity of demand is -0.75, then what is the new quantity supplied and the new quantity demanded of chickpeas at the support price? How much chickpeas would the government need to buy to keep the price supported at $12.81/cwt?

Answer 1

5. Given that equilibrium quantity is 250 million lb, this means that initial quantity supplied is 250 million lb too.

Therefore, quantity supplied is changing (falling) by 37.5 million lb.

Thus, the new quantity supplied is = 250 - 37.5 = 212.5 million lb.