1. Market demand and supply are given by the following equations:

Qd = 5000 - 200P

Qs = -1000 + 500P

A. Calculate point price elasticity of demand at the market equilibrium.

B. Calculate point price elasticity of supply at the market equilibrium.

2. Inverse market demand and supply are given by the following equations:

P = 60 - 0.50 Qd

P = 20 + 0.25 Qs

A. Calculate point price elasticity of demand at the market equilibrium.

B. Calculate point price elasticity of supply at the market equilibrium.

3. The market for Wheat has the following Supply and Demand Functions.

Supply: Qs = 2050+234P and Demand: Qd = 3550-266P where P is measured in dollars/bushel and Q is measured in millions of bushels

(A) Solve for the market clearing price and equilibrium:

Pe :_________________________________ (include units)

Qe :_________________________________ (include units)

(B) What are the price elasticities of demand and supply at this price and quantity? (Include sign when appropriate, and round to the nearest 100th - 2 decimal places.)

Q,P:_________________________________

Qs,P:_________________________________

4. Suppose that the demand curve for garbanzo beans is given by Q=20-P where Q is thousands of pounds of beans bought per week and P is the price in dollars per pound.

(a) How many beans will be bought at P=0?

(b) At what price does the quantity demanded of beans become 0?

(c) Calculate total expenditures (P*Q) for beans of each whole dollar price between the prices identified in parts a & b. (d) What price for beans yields the highest total expenditure?

(e) Suppose the demand for beans shifted to Q=40-2P. How would your answers to part a through part d change? (Include a graphical depiction.)