- Below Are The Inverse Demand And Supply Functions In A Market For The Fancy Soda Demand P 180 120 Supply P 24 1 (80.41 KiB) Viewed 49 times
Below are the inverse demand and supply functions in a market for the Fancy Soda: Demand: P = 180 - 120 Supply: P = 24 + 18Q where P is the price per unit and Q is the number of units (quantity). a. Show a sketch graph of these two functions. Show the intercepts on the P and Q axes. b. What is the slope of the demand function? Interpret the meaning of the slope coefficient. c. Identify the equilibrium price and quantity in the market. What happens in the market when the equilibrium point is reached? 7 3 9 "0 71 72 d. What is the consumer surplus at the equilibrium point? Calculate its value and indicate the corresponding area in the diagram drawn above. 73 74 75 e. What is the price elasticity of demand at the equilibrium point found above? Is the demand price elastic, inelastic or unit elastic at this point? What will happen if the price goes up by 3%? 76