Consider the market for energy drinks (a popular drink among college students) in a mid-sized college town, where the demand for energy drinks is described by the equation:qd=290-20p , and the supply of energy drinks is described by the equation: qs+40p-100. Consider that the market is in equilibrium.

1. What is the current market outcome?

Currently, the market price is $:

And the quantity of energy drinks traded is:

2. What is the point price elasticity of demand at the current

market price?

1st blank is a value: second blank is either

elastic - inelastic- perfectly elastic- perfectly inelastic-

unit elastic

At the current market price, the price elasticity of demand is

________ and demand is ________ at that price

Suppose the price of sodas (a substitute in production)

increases, and at the same time, the removal of programs at the local college

led to a decrease in the number of college students enrolling from out of

state. The market is in equilibrium after these events.

In general, what is the expected market outcome from these

two events?

in the first 4 blanks: decrease - increase- have ambiguous

change- not change

in 5th blank: decrease - increase - not change

In general, one would expect, demand will __________, supply

will________, the equilibrium price will ________ and the equalibrium quantity

will___. Furthermore one would expect the total revenue for the sellers in the

market to___________

Consider the following equations that represent demand or supply curves

Equation A: QD = 250 -20P OR Equation b: qd=290-20p or equation C: QD=340-20P or equation D: QS=40P-80 or equation E: QS=40P-100 or equation F: QS=40P-110

4. Which of following equations is more likely to be expected demand equation AFTER the events?

Pick equation

After the events, one would expect the supply equation to equation _______ A,B OR C

5. Which of following equations is more likely to be expected supply equation after the events?

After the events, one would expect the supply equation to Equation______ D or E or F?

6. As a result of the events, and given the equations after the events have occurred, what is the market outcome?

Complete the sentence by entering one of the following phrases in each of the blank space provided. A phrase can be used more than once:

in the 1st and 2nd blank spaces: a numerical value

in the 3rd blank space: decreases I increases I did not change

in the 4th blank space: as expected I not as expected

in the 5th blank space: change in demand I change in supply I no change in demand I no change in supply

in the 5th blank space: added to I did not affect I reduced

As a result of the market events, the new market price is $_______ and quantity of energy drinks traded is______

In addition total revenue for the sellers in the market _________ and this was_____. One possible reason for this outcome is the _____ which ______ the anticipated change in total revenue.