Question

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

as per answering guidelines, first question is answered.