In the market for hand sanitizers, the demand function is given by: $ q = 80 - p $, where $ q $ is the quantity of hand sanitizers (in thousands) and $ p $ is the price of hand sanitizers in dollars. Suppose the current market price for hand sanitizers is $4.1. **What is the inverse demand function equal to? Draw it in a diagram.**2. **At a price of $4, what is the level of consumer surplus?**3. **Due to the unprecedented COVID-19 pandemic, people's preferences for sanitizing their hands change in favor of hand sanitizers. In fact, for any given price of hand sanitizers, people now want to purchase 20 units (in thousands) more hand sanitizers.** - What is the new demand curve? - What is the new inverse demand curve? - Draw the new inverse demand curve in your diagram.4. **Suppose that after the increase in demand, the new price becomes $8. What is consumer surplus equal to at this new price (and with the new inverse demand curve)?**5. **[Challenge Question] What would the consumer surplus be if the government decided to implement both a quota equal to 50 units of hand sanitizers and a price ceiling of $4. Draw this scenario in your diagram and then calculate the new consumer surplus.**

The demand function for hand sanitizers is given by: Here q denotes quantity of hand sanitizers ( in…

Answered: In the market for hand sanitizers the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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In the market for hand sanitizers, the demand function is given by: $ q = 80 - p $, where $ q $ is the quantity of hand sanitizers (in thousands) and $ p $ is the price of hand sanitizers in dollars. Suppose the current market price for hand sanitizers is $4.

1. **What is the inverse demand function equal to? Draw it in a diagram.**
2. **At a price of $4, what is the level of consumer surplus?**
3. **Due to the unprecedented COVID-19 pandemic, people's preferences for sanitizing their hands change in favor of hand sanitizers. In fact, for any given price of hand sanitizers, people now want to purchase 20 units (in thousands) more hand sanitizers.**
- What is the new demand curve?
- What is the new inverse demand curve?
- Draw the new inverse demand curve in your diagram.
4. **Suppose that after the increase in demand, the new price becomes $8. What is consumer surplus equal to at this new price (and with the new inverse demand curve)?**
5. **[Challenge Question] What would the consumer surplus be if the government decided to implement both a quota equal to 50 units of hand sanitizers and a price ceiling of $4. Draw this scenario in your diagram and then calculate the new consumer surplus.**

Expert Solution

Step 1: Determine the given information:

The demand function for hand sanitizers is given by: $q equals 80 minus p$

Here q denotes quantity of hand sanitizers ( in thousands) and p denotes price.

Current market price: p=$4

The inverse demand function is the function of quantity, which shows how much price we need to pay to buy a certain quantity.

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