Consider the following Demand curve for Uber Rides: Q = = 120 - 4p Suppose that the Supply Curve is perfectly elastic at a
Consider the following Demand curve for Uber Rides: Q = = 120 - 4p Suppose that the Supply Curve is perfectly elastic at a price of $20 per unit. 11. Draw both the Supply and Demand functions with Q on the x-axis and p on the y-axis. Label any x-intercepts and y-intercepts. [2 points] 12. What is the free-market equilibrium Quantity (Q*) and price (p*)? [1 point] 13. What is the slope of the Demand Function? Is it elastic or inelastic? [2 points] Now suppose that the Supply Curve shifts and is now perfectly elastically supplied at a price of $25 per unit. 14. What is the new free-market equilibrium Quantity (Q*) and price (p*) after this shift? [1 point] 15. What is the elasticity of demand between p = $20 and p = $25? Is the Demand Curve elastic, unit elastic, or inelastic on this portion of the Demand Curve? How do you know? [3 points]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
11Qd1204P PRICE 0 10 20 30 QUANTITY 120 80 40 0 Qs20 12 Equilibrium ...See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started