Question

- Suppose the demand and supply curves for a large specialty pizza are given by:

Qd = 120 – 10P

Qs = -30 + 5P.

- Using the demand and supply functions above, the equilibrium price of a pizza is ____, and the equilibrium quantity is ____. Illustrate your answer.
- Compute Price elasticity of demand and supply at this equilibrium.
- Compute CS and PS and illustrate on a graph.
- Suppose that the government decrees that a specialty cannot be sold above $8. As a result of the decree, CS will increase/decrease by _____; PS will increase/decrease by _____. Show computations.
- Government wants to increase its revenues. Legislators decide that they will impose an excise tax of $3 per pizza on pizza vendors. After the tax is imposed, consumers will pay a price of _____ per pizza and buy (quantity) _____ Pizzas. The sellers will receive a price of ____ per pizza. Illustrate on same graph (part d).
- The government will collect total tax revenue of ______. Compute DWL and illustrate DWL in the graph above.
- Who pays more of the tax on the Pizza? Explain why using the price elasticity of demand/supply you have computed in part (b) above.

Answer #1

The demand for pizza in a large town is written as: Qd = 26 -
10P + 5Pb - Ps + 10Y, where Qd is the quantity demanded, P is the
price of pizza, Pb is the price of burittos, Ps is the price of
soft drinks sold in the pizza restaurants, and Y is personal income
per month (in thousand dollars). Suppose Pb = $4; Ps = $1 and Y = 3
(in thousand dollars) The supply of pizza...

Deadweight Loss] Suppose the market for corn in Banana Republic
is competitive. The domestic supply and demand function of corn is
Qs = 10P and Qd = 100 − 10P, respectively. Both of them measured in
billions of bushels per year.
(a) Calculate the equilibrium price and quantity,
consumer surplus (CS), and producer surplus (PS).
(b) Suppose the government offers a subsidy of $2 per
bushel to the firms. In equilibrium, the consumers are paying $4
per bushel and the...

Suppose the demand and supply curves for pizza is given
by:
Qd =500 - 40P
and the market supply for pizza is given by:
Qs = 20P – 100
where P= price (per pizza).
In equilibrium, how many pizzas would be sold and at what
price?
Determine the quantity demanded and quantity supplied if the pizza
price is set at $8.00. Explain the market adjustment process.
Suppose the price of hamburgers, a substitute for pizza, doubles.
This leads to a...

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.
What is the quantity demanded?
What is the quantity supplied?
What is the amount of the surplus?
Suppose market demand increases to Qd=200-5P.
What is the new equilibrium...

The demand and supply curves for Fuji apples are given by
QD = 50 – 6P and
QS = 4P – 2, where P is price
per bag and Q is in thousands of bags. What are consumer
surplus and producer surplus at the equilibrium price?
Answer Choices:
CS = $29,422; PS = $44,180
CS = $15,006; PS = $7,657
CS = $856,000; PS = $1,126,113
CS = $450; PS = $375

You are given the following information about the demand for and
supply of widgets in the Republic of Xénïa. Answer the questions
that follow. If you draw diagrams, use a ruler, label the diagrams
completely, show demand choke price, demand intercept, supply choke
price, supply intercept, etc. Do not use double columns or put
rectangles or squares around your answers. Use “D” for demand and
“S” for supply. Do not use Qd or Qs to label your diagrams.
Although you...

The demand and supply for Fuji apples are given by
QD = 17,500 - 25 P and
QS = 10 P, where P is price
per pound and Q is pounds of apples. What is the consumer
surplus and producer surplus at the equilibrium?
A.
CS = $500,000; PS = $1,250,000
B.
CS = $750,000; PS = $1,250,000
C.
CS = $500,000; PS = $750,000
D.
CS = $1,250,000; PS = $500,000
The market for plywood is characterized by the...

Suppose there is a market at its competitive equilibrium.
Demand p = 100 - QD
Supply p = 20 + (QS /3) The government introduces a subsidy of s
= $4 per unit of the good sold and bought.
(a) Draw the graph for the demand and supply before subsidy.
(b) What is the equilibrium price and quantity before the
subsidy and after the subsidy?
(c) Looking at the prices buyers pay and sellers receive after
the subsidy compared to...

Consider a perfectly competitive market in the short-run with
the following demand and supply curves, where P is in dollars per
unit and Q is units per year:
Demand: P = 500 –
0.8Q
Supply: P = 1.2Q
Calculate the short-run competitive market equilibrium price
and quantity. Graph demand, supply, and indicate the equilibrium
price and quantity on the graph.
Now suppose that the government imposes a price ceiling and
sets the price at P = 180. Address each of...

Domestic Supply for Steel, Qs = 100P. Domestic Demand, Qd =
11000 -10P. Draw the American (domestic) Market for steel with an
Equilibrium DOMESTIC Price of $100 a ton.
Draw in a world Price line at $50.
Assuming there is free trade
How much is domestically produced?
How much is domestically demanded?
How much is imported?
Now the US government adds a $20 tariff per ton.
How much is domestically produced?
How much is domestically demanded?
How much is imported?...

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