Basic Supply and Demand

Suppose you see the following price and quantity data for bottled water from Consumer surveys:

Price of bottled water	Demand for bottled water
0	500
3	470
5	450
10	400
20	300

1. Draw the demand curve, and write down a (simple linear) function relating demand to price.
2. Calculate the elasticity of demand when price=5.
3. Suppose you conducted a survey of a company that produces bottled water, and you came up with the following information for the company. Draw the supply curve of the company, and write down the (simple linear) function relating supply to price

Price of bottled water	Supply of bottled water
0	0
3	6
5	10
10	20
20	40

4. Calculate the elasticity of supply when the quantity is 10.

5. Suppose there are 5 identical companies with the same supply curve as above. Draw the market supply curve, and write down the market supply function.

6. Take the market demand and supply curves from above, draw them on the same axis. Denote the market clearing quantity and price on the graph, and solve for the market clearing price and quantity.