Question One (15 Marks) The economic advisors to an economy estimate the supply and demand curves...

Question One The economic advisors to an economy estimate the supply and demand curves for cigarettes as the following:

Qd=140,000-25,000P

Qs=20,000+75,000P

, where Q is the daily sales in packs of cigarettes, and P is the price per pack.

Calculate the consumer surplus and producer surplus of this economy at the market clearing condition;

b. Calculate the price elasticities of demand and supply in this economy. Interpret your findings.

Expert Solution

Rahul Sunny answered 8 months ago

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