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ECON-555.docx - Question 1 (10 points) The city of Chambana...

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Question 1 (10 points)The city of Chambana has a large number of video poker arcades.The demand by patrons forthe games (in thousands per week) isQd= 300 - 3Pand the supply isQs= 3PwherePis thepricein centscharged to play a game.What is the equilibrium number (quantity) of games played?What is the equilibrium price?Draw a diagram depicting the equilibrium in this market.D Price intercept0=300-3PP=100D Quantity interceptQd=300S Price interceptP=0Page1of5
Equilibrium300-3P=3P300=6PP=300/6P=50Qs = 3*50Qs = 150Question 2 (15 points)Continue your analysis of the video poker market in Chambana: demand by patrons for thegames(in thousands per week)isQd = 300 - 3Pand the supply isQs = 3PNow suppose that the city of Chambana passes a new law which requires that all video pokerarcades contributemcents to a city charitable fundfor each gameplayed on their machines.In a diagram, show the effect of the new law on the market and explain.(Do not try togive an algebraic solution; just show what happens graphically and describe.).Page2of5

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Term
Fall
Professor
Codrin

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