# Ch1b - Chapter 1 Practice B 1 Let the following equations...

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Chapter 1 Practice B 1. Let the following equations represent the supply and demand for student rental housing in Denton: Demand: P = 2,300 – .5Q Supply: P = 200 + .25Q a. Graph demand and supply, noting the relevant intercepts and the equilibrium P and Q. b. Now assume UNT gives each student a voucher worth \$300 (hint: vouchers are like reverse taxes). On the graph above (or a new one below if you prefer), determine the effect of the voucher program on students. That is, what is the new equilibrium P and Q? c. How much benefit will each student get from the voucher program? 2. Demand for espresso in Seattle can be illustrated by the following demand curve: P = 10 - .2Q Supply can be illustrated by the following supply curve: P = 1 + .05Q a. Graph supply and demand. What is the equilibrium price and quantity of espresso? b. To raise money for early childhood learning programs, the city has imposed a \$1 excise tax on espresso. Illustrate the tax on your graph. What will be the new market price and quantity of espresso? How much of the economic incidence will fall on buyers and how much on sellers? 3. The following are the supply and demand for housing in Denton (note that these are not the usual inverse curves): D: Q = 3,600 – 4P S: Q = -600 + 2P a. Please graph the supply and demand curves and indicate the relevant intercepts and the

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