1. Assume market for widgets can be describeed by the following equations:
Demand: Q = 90-3P
Supply: Q = 10+P
Where P is equilibrium price in dollars per unit and Q is quantity in thousands of units.
What is equilibrium price and quantity? Compute price elasticity of demand at equilibrium price and quantity. Compute the price elasticity of supply at \equilibrium price and quantity.
2. Assume you are in charge of toll bridge that is essentially cost free. Demand for bridge crossing is given by P = 50-Q. Sketch demand curve for bridge crossings. How many people would cross bridge if there were no toll? Determine s the loss of consumer surplus associated with charge of a toll of $5.00?
3. Demand for wheat in USA given by Demand: QUS = 900-20P, while demand for wheat in Europe is given by QEU = 1800-30P. Deduce and draw aggregate demand schedule.