Exam 15: Equilibrium

Daily demand for gasoline at Billy-Bob's Mobile Station is described by Q = 776 - 200p, where Q are gallons of gasoline sold and p is the price in dollars. Billy-Bob's supply is Q = 2890 + 1,500p. Suppose the state government places a tax of 20 cents on every gallon of gasoline sold. What is the deadweight loss resulting from this tax?

The demand curve for rutabagas is a straight line with slope 23 and the supply curve is a straight line with slope 2. Suppose that a new tax of $3 per sack of rutabagas is introduced.

The inverse demand function for apples is defined by the equation p = 214 - 5q, where q is the number of units sold. The inverse supply function is defined by p = 7 + 4q. A tax of $36 is imposed on suppliers for each unit of apples that they sell. When the tax is imposed, the quantity of apples sold falls to

If the supply curve is vertical, then the amount supplied is independent of price.

Schrecklich and Lamerde are two obscure modernist painters, who are no longer alive but whose paintings are still enjoyed by persons of dubious taste. The demand function for Schrecklichs is 200 - 4P_S - 2P_L and the demand function for Lamerdes is 200 - 3P_L - P_S, where P_S and P_L are respectively the price of Schrecklichs and Lamerdes. If the world supply of Schrecklichs is 110 and the world supply of Lamerdes is 110, then the equilibrium price of Schrecklichs is

Remember King Kanuta and his tropical island? The demand function for coconuts by his subjects on the island is D(p) = 1,200 - 100p and the supply function is S(p) = 100p. The law used to be that any subject who consumed a coconut had to pay another coconut to the king. King Kanuta then ate all the coconuts he got. But now the king, apparently fed up with coconuts, decides to sell the coconuts that he collects in the local market at the going selling price, p_s. In equilibrium, the number of coconuts that will now be produced is

The inverse demand function for cases of whiskey defined by p = 186 - 6q, and the inverse supply function is defined by p = 90 + 2q. Originally there was no tax on whiskey. Then the government began to tax suppliers of whiskey $32 for every case they sold. How much did the price paid by consumers rise when the new equilibrium was reached?

The demand function for rental apartments is q = 960 - 7p and the supply function is q = 160 + 3p. The government makes it illegal to charge a rent higher than $35. How much excess demand will there be?

The inverse demand function for cases of whiskey defined by p = 160 - 6q, and the inverse supply function is defined by p = 61 + 3q. Originally there was no tax on whiskey. Then the government began to tax suppliers of whiskey $27 for every case they sold. How much did the price paid by consumers rise when the new equilibrium was reached?

The inverse demand function for lemons is defined by the equation p = 120 - 11q, where q is the number of crates that are sold. The inverse supply function is defined by p = 8 + 3q. In the past there was no tax on lemons but now a tax of $84 per crate has been imposed. What are the quantities produced before and after the tax was imposed?

The quantity q of apricots demanded at price p is given by q = 36 - 4p and the supply schedule by q = 2p. The government imposes a quantity tax at some rate t, which it collects from buyers. What is the smallest tax rate that will result in no apricots being bought or sold?

Suppose that King Kanuta, whom you met in your workbook, demands that each of his subjects give him 1 coconut for every coconut that they consume. The king puts all of the coconuts that he collects in a large pile and burns them. The supply of coconuts is given by S(p_s) = 100p_s, where p_s is the price received by suppliers. The demand for coconuts by the king's subjects is given by D(p_d) = 1,500 - 100p_d, where p_d is the price paid by consumers. In equilibrium, the price received by suppliers will be

The demand for pickles is given by p = 131 - 2q and the supply is given by p = 5 + 7q. What is the equilibrium quantity?

In a crowded city far away, the civic authorities decided that rents were too high. The long-run supply function of two-room rental apartments was given by q = 14 + 5p, and the long-run demand function was given by q = 329 - 5p, where p is the rental rate in crowns per week. The authorities made it illegal to rent an apartment for more than 25 crowns per week. To avoid a housing shortage, the authorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How much would the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?

The price elasticity of demand for a certain agricultural product is constant (over the relevant range of prices) and equal to -1.50. The supply elasticity for this product is constant and equal to 4. Originally the equilibrium price of this good was $15 per unit. Then it was discovered that consumption of this product was unhealthy. The quantity that would be demanded at any price fell by 11%. The percent change in the long-run equilibrium consumption of this good was

The demand for pickles is given by p = 167 - 3q and the supply is given by p = 5 + 6q. What is the equilibrium quantity?

In a certain kingdom, the demand function for rye bread was q = 181 - 8p and the supply function was q = 13 + 6p, where p is the price in zlotys and q is loaves of bread. The king made it illegal to sell rye bread for a price above 6 zlotys per loaf. To avoid shortages, he agreed to pay bakers enough of a subsidy for each loaf of bread so as to make supply equal demand. How much would the subsidy per loaf have to be?

In a certain kingdom, the demand function for rye bread was q = 381 - 3p and the supply function was q = 5 + 7p, where p is the price in zlotys and q is loaves of bread. The king made it illegal to sell rye bread for a price above 32 zlotys per loaf. To avoid shortages, he agreed to pay bakers enough of a subsidy for each loaf of bread so as to make supply equal demand. How much would the subsidy per loaf have to be?

Supply and demand theory shows us that the burden of a sales tax is shared equally by suppliers and demanders whether the tax is collected from the sellers or collected from the buyers.

The demand function for orange juice is q = 269 - 9p and the supply function is q = 9 + 4p, where q is the number of units sold per year and p is the price per unit, expressed in dollars. The government decides to support the price of orange juice at a price floor of $24 per unit by buying orange juice and destroying all that it has purchased. How many units must the government destroy per year?