ECON_W3211_PS2

ECON_W3211_PS2 - Q D = 1 P . What price will maximize...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON W3211.002 Intermediate Microeconomics Problem Set 2 Due Monday, September 27, 2010 1. Perloff, Problem 3.11 2. Let Q = AP ± be a demand curve, where A > 0 and ± < 0 . (a) What is the price elasticity of demand? (b) Revenue is the price of a good times the quantity sold of that good, i.e., R = P × Q . Assume A = 1 and ± = - 1 . Let Q s = 4 P be a supply curve. What is the equilibrium price, quantity and revenue? (c) Now suppose that the supply curve shifts to Q s = 4 P - 3 . What is the equilibrium price, quantity and revenue? (d) Recall that
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Q D = 1 P . What price will maximize revenue? 3. Suppose the supply and demand curves for gasoline are given by Q D = 9-1 4 P Q S = 2 P (a) What is the equilibrium price and quantity? (b) What is the price elasticity of demand and supply at the equilibrium? (c) Suppose the government impose a $0.9/gallon tax on gasoline, paid by buyers. Solve for the new equilibrium. What portion of the tax is is paid by consumers, and what portion by sellers? 1...
View Full Document

Ask a homework question - tutors are online