1.A market is described by the following supply and demand curves:

qs = p 40

qd =200 p

a.Solve for the equilibrium price and quantity.

b.Draw the graph of Supply and Demand curves.

c.If the government imposes a price ceiling of 100, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demande, and size of the shortage or surplus?

I f the government imposes a price floor of 100, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demande, and size of the shortage or surplus?

1.For each of the following pairs of goods, which good would you expect to have more elastic demand and why? Explain them in regards to the pricing strategy of the producer.

a.Champagne or water

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