Problem Solving. Given the demand equation for chocolate bars Q = 1,600 – 30OP and the supply equation for chocolate bars Q = 1,400 +700P, Show your solutions. (adapted from Mankiw, 2008) a) Calculate the equilibrium price and quantity in the market for chocolate bars. b) Calculate the price elasticity of demand at the equilibrium price and quantity (using point elasticity formula). c) Calculate the price elasticity of supply at the equilibrium price and quantity. d) If a per unit sales tax is imposed on this market, who will pay a larger share of the tax and why?

Problem Solving. Given the demand equation for chocolate bars Q = 1,600 – 30OP and the supply equation for chocolate bars Q = 1,400 +700P, Show your solutions. (adapted from Mankiw, 2008) a) Calculate the equilibrium price and quantity in the market for chocolate bars. b) Calculate the price elasticity of demand at the equilibrium price and quantity (using point elasticity formula). c) Calculate the price elasticity of supply at the equilibrium price and quantity. d) If a per unit sales tax is imposed on this market, who will pay a larger share of the tax and why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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