Problem 1: American Company is interested in obtaining quick estimates of the supply and demand curves for coal. The firm's research department informs you that the elasticity of supply is approximatively 1.7, the elasticity of demand is approximatively -0.85, and the current price and quantity are $41 and 1,206 respectively. Price is measured in dollars per ton, quantity the number of tons per week. a. Find the supply and demand equations b. Calculate the new demand curve if the demand shifted by + 5%. c. If the government refused to let Americans raise the price when demand increased in (b) above, what shortage is created? d. Show the shortage in a graph. Label your graph.

Problem 1: American Company is interested in obtaining quick estimates of the supply and demand curves for coal. The firm's research department informs you that the elasticity of supply is approximatively 1.7, the elasticity of demand is approximatively -0.85, and the current price and quantity are $41 and 1,206 respectively. Price is measured in dollars per ton, quantity the number of tons per week. a. Find the supply and demand equations b. Calculate the new demand curve if the demand shifted by + 5%. c. If the government refused to let Americans raise the price when demand increased in (b) above, what shortage is created? d. Show the shortage in a graph. Label your graph.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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