Consider a competitive market where daily supply and demand are QP(P) = 15 – , and Q$(P) = 2P, where quantities are measured in thousands of units and prices are in dollars per unit. Assume that this market does not create any externalities – meaning that all costs and benefits are borne by the sellers and buyers directly involved in the market. 2 a. Calculate the formulas for the price elasticities of supply and demand as functions of price, then find their values at the equilibrium price. Are the signs consistent with what you were expecting? b. Draw a graph of the market, showing the equilibrium point. Let's say demand changes in the following way: at any given price, the quantity demanded is reduced by 5 units. Could we have expressed this demand shift as a change in inverse demand? How would we have phrased that? Show the new equilibrium in the graph and describe how the market price and quantity

Consider a competitive market where daily supply and demand are QP(P) = 15 – , and Q$(P) = 2P, where quantities are measured in thousands of units and prices are in dollars per unit. Assume that this market does not create any externalities – meaning that all costs and benefits are borne by the sellers and buyers directly involved in the market. 2 a. Calculate the formulas for the price elasticities of supply and demand as functions of price, then find their values at the equilibrium price. Are the signs consistent with what you were expecting? b. Draw a graph of the market, showing the equilibrium point. Let's say demand changes in the following way: at any given price, the quantity demanded is reduced by 5 units. Could we have expressed this demand shift as a change in inverse demand? How would we have phrased that? Show the new equilibrium in the graph and describe how the market 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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