Consider a firm that produces a wide range of cookies. This firm produces on demand and supplies for one of its most popular: the vanilla cookie.

According to his estimates:

Qd=2P+100

Qo=3P45

where Qd is the quantity demanded of vanilla cookies, P is the price of vanilla cookies (expressed in $) and Qo is the quantity supplied of vanilla cookies.

Issue 1:

Determine the equilibrium in the vanilla cookie market.

Indicate your calculations and answer in the space below.

Issue 2:

Define and then calculate the price elasticity of demand at the equilibrium price. Interpret your result.

Indicate your calculations and answer in the space below.

Issue 3:

Calculate consumer surplus, producer surplus and total surplus at market equilibrium. Indicate your calculations.

Indicate your calculations and answer in the space below.

Q4:

Graph the supply and demand curves of the vanilla cookies market. In your graph, identify the balance. (Draw the graph)