Exam 2: Supply and Demand

Suppose the market for grass seed is expressed as: Demand: Qᴰ = 100 - 2p Supply: Qˢ = 3p Price elasticity of supply is constant at 1.If the supply curve is changed to Q = 8p,price elasticity of supply is still constant at one.Yet with the new supply curve,consumers pay a larger share of a specific tax.Why?

-The above figure shows three different supply-and-demand graphs.Which graph best represents the market for workers at your nearest fast-food restaurant?

Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping.At the market equilibrium,if demand is more elastic than supply in absolute value,a $1 specific tax will

The price elasticity of demand for gasoline is estimated to be -0.2.Two million gallons are sold daily at a price of $1.Use this information to calculate a demand curve for gasoline assuming it is linear.

The duration of the "short-run"

-The above figure shows three demand curves labeled D1,D2,and D3.Rank these three demand curves in terms of elasticity at a price of c.