Econ 520 Assignment 1 Questions Answers

Assignment 1ECON520Multiple choiceDBBBCCBC1. The market for gravel has been estimated to have these supply and demand relationships: Supply P = 10 + 0.01Q Demand P = 100 - 0.01Q, where P represents price per unit in dollars, and Q represents sales per week in tons. Determine the equilibrium price and sales. The equilibrium price can be found by equating S to D in terms of Q. 10 + 0.01Q = 100 - 0.01Q 0.02Q = 90 Q = 4,500 tons/week P = 10 + 0.01(4,500) = $55/ton.What is the price elasticity of demand at the equilibrium. Is this elastic, unit elastic, or inelastic?PQ∆Q∆P=PQ1slope of demand=5545001-0.01=-1.22This is elastic. Determine the amount of shortage or surplus that would develop at P = $40/ton. Quantity Supplied: P=10+.01Q=40, Q=(40-10)/.01=3000Quantity Demanded: P=100-.01Q=40, Q=(100-40)/.01=6000Shortage of 6000-3000=3000 tons/week2. The market for iPhones has been estimated to have the following supply and demand relationships:Supply: P = 200 + 0.01QDemand: P = 500 – 0.01Qwhere P represents the price and Q represents sales per week. Determine the equilibrium price and