Question

1) Suppose the supply equation​ is:

Q = 11 + 1.30p

What is the price elasticity of supply if the market price is ​$44?

2) Suppose the demand equation is Q = 120- 0.75p. What is the price elasticity of demand if the price is $60 per unit and output is 75 units?

The price elasticity of demand is ____?

3) Suppose that the demand function for aluminum is Q = 40- 0.2P

where p is the price paid by consumers in dollars per pound and Q is the quantity demanded measured in pounds. The supply curve for aluminum is estimated to​ be: Q = 0.2p such that n = 1

The​ pre-tax equilibrium price is ____?

4) Green et al.​ (2005) estimate the supply and demand curves for California processed tomatoes. The supply function​ is: ln(Qs​) ​= 0.200​ + 0.550​ ln(p), where Q is the quantity of processing tomatoes in millions of tons per year and p is the price in dollars per ton. The demand function​ is:

​ln(Qd​) = 2.600 - 0.200 ln(p) + 0.150ln (pt)

where Pt is the price of tomato paste​ (which is what processing tomatoes are used to​ produce) in dollars per ton. Let the price of tomato​ paste, pt be $110.

Suppose that the government imposes a price support on processing tomatoes at ​$77

per ton. The government will buy as much as farmers want to sell at that price. ​ Thus, processing firms pay

​$77.

How many tons of processing tomatoes will firms​ buy? ___ units​(million tons per​ year).  ​(Enter a numeric response using a real number rounded to three decimal​ places.)

Answer 1