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ECON 204
STUDY QUESTIONS 4
Equilibrium
1)
Suppose that demand for broccoli is given by
g
G
= 400−2
±
G
, and supply is given by
g
²
=
3
±
²
a) What is the price elasticity of demand when P=100? (Hint: Your answer should be a
number) Show how you calculated it.
b) Find the equilibrium quantity and price, and plot it on a graph. Label axes,
intercepts,slopes of the demand and supply functions.
c)Find the consumer surplus in this equilibrium. Find the producer surplus in this equilibrium.
2)
We have the same demand and supply for brocoli in question (
g
G
= 400−2
±
G
, and
g
²
=
3
±
²
) now suppose that the government gives the producers a perunit subsidy in the
amount of 20 dollars (this means that for each unit they sell, they get $20 from the
government, in addition to what they are getting from the consumers). Find the new
equilibrium price and quantity and prices, that is:
a)
What is the price received by the suppliers?
b) What is the price paid by the demanders?
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 Spring '09
 ızakatiyas
 Economics, Price Elasticity

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