Consider a competitive market for which the quan- tities demanded and supplied (per year) at various prices are given as follows: PRICE (DÖLLARS) DEMAND (MILLIONS) SUPPLY (MILLIONS) 60 22 14 80 20 16 100 18 18 120 16 20 a. Calculate the price elasticity of demand when the price is $80 and when the price is $100. b. Calculate the price elasticity of supply when the price is $80 and when the price is $100. c. What are the equilibrium price and quantity?

Consider a competitive market for which the quan- tities demanded and supplied (per year) at various prices are given as follows: PRICE (DÖLLARS) DEMAND (MILLIONS) SUPPLY (MILLIONS) 60 22 14 80 20 16 100 18 18 120 16 20 a. Calculate the price elasticity of demand when the price is $80 and when the price is $100. b. Calculate the price elasticity of supply when the price is $80 and when the price is $100. c. What are the equilibrium price and quantity?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. Consider a competitive market for which the quan-
tities demanded and supplied (per year) at various
prices are given as follows:
PRICE
(DÖLLARS)
DEMAND
(MILLIONS)
SUPPLY
(MILLIONS)
60
22
14
80
20
16
100
18
18
120
16
20
a. Calculate the price elasticity of demand when the
price is $80 and when the price is $100.
b. Calculate the price elasticity of supply when the
price is $80 and when the price is $100.
c. What are the equilibrium price and quantity?
d. Suppose the govemment sets a priceceiling of $80. Will
there be a shortage, and if so, how large will it be?

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