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Unformatted text preview: At a price of $2 per unit a. the quantity purchased is 1,000 units. b. there will be a tendency for the price to decrease. c. there is a surplus of 300 units. d. the quantity sold is 350 units. e. the quantity purchased equals the quantity sold. 4. In the table above the equilibrium price and quantity is a. $4, 1000 units b. $3, 500 units c. $2, 900 units d. $3, 300 units 5. Using the table given, calculate the elasticity of demand between $3 and $4. (Write down the formula you are using.) State whether demand is elastic, inelastic or unitary. 6. Compare a market where demand is very elastic to one where demand is very inelastic. Suppose the current equilibrium price and quantity are the same in both markets. Suppose further that the government imposes a price ceiling which is below the equilibrium price. Compare the shortages or surpluses that result. Explain the difference in these two cases....
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 Summer '07
 BrentKreider
 Microeconomics, Opportunity Cost

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