In Country Faraway, cigarettes are forbid,so people trade cigarettes in a black m The cigarette demand is QD = 12 − P , and the cigarette supply is Qs = 2P (a) Find the equilibrium price and quantity in the black market (b)If a price of 7 and 2 were charged what is the excess demand or supply at the given prices?

In Country Faraway, cigarettes are forbid,so people trade cigarettes in a black m The cigarette demand is QD = 12 − P , and the cigarette supply is Qs = 2P (a) Find the equilibrium price and quantity in the black market (b)If a price of 7 and 2 were charged what is the excess demand or supply at the given prices?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 5CQQ

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Question

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1. In Country Faraway, cigarettes are forbid,so people trade cigarettes in a black m The cigarette demand is QD = 12 − P , and the cigarette supply is Qs = 2P

(a) Find the equilibrium price and quantity in the black market

(b)If a price of 7 and 2 were charged what is the excess demand or supply at the given prices?

2.Explain Production possibility frontier with an example and give explanation on why it is represented as a curved diagram(concave)

3. If the price falls from 6 to 4, the quantity demanded rises from 8000 to 12000.

a) Calculate the price elasticity of demand

b) What happens to turnover (Price * Quantity) due to the price change?

Definition Definition Curve that represents the various combinations of production possibilities of two commodities when resources or factors of production are given.

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