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BPUB250 Midterm Review Session Problems
Spring 2012
1.
Supply and Demand
The sellers of Jeremy Lin jerseys have a market supply curve given by There are
two types of consumers, of whom there are 40 each. The individual demand for each
consumer is given by
a.
Draw the individual demand curves.
b.
Compute the market demand curve .
c.
Draw the market demand and market supply curves.
d.
Compute the equilibrium price and quantity of _____.
e.
What is the elasticity of demand at the equilibrium? The elasticity of supply?
Now, suppose there is a $5 unit tax on sellers.
f.
Do you expect the tax burden to fall more heavily on the consumers or producers
g.
Calculate what fraction of the tax will fall on the consumers using the price elasticity
of demand and price elasticity of supply.
h.
What is the new equilibrium price and quantity after the tax?
i.
Calculate the tax revenue collected by the gov’t.
j.
Calculate the deadweight loss from the tax.
k.
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 Spring '08
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