BPUB250
Problem Set2
Due: February 89, 2012 in Class
Question 1
This question continues from Question2 in Problem Set1.
Now Wharton School introduces a $2/burrito student discount, so that Wharton students pay $2
less than the general public per each burrito they buy.
(a)
Find the new equilibrium price and quantity, and compute how many burritos are sold to
the general public and to students.
(b)
Calculate the total change in consumer surplus due to student discount.
Question 2
Consider the market for pork. The demand for pork is given by
Q
d
= 22520P
and the initial
supply is given by
Q
s
=50+35P
. The market for pork is perfectly competitive.
(a)
Compute the equilibrium
(b)
What are the price elasticity of demand and the price elasticity of supply at the market
equilibrium? Are they elastic, inelastic or unit elastic? Based on the price elasticities, who
do you think will suffer more if a specific tax is imposed on the producers?
Now a $2 per unit tax is charged to producers.
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 Spring '08
 Seim
 Supply And Demand, Jennifer, Au Bon Pain

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