Q2. Suppose the demand for orange is QD = 500 - 10P and the supply for orange is QS = 10 + 20P.

a. Graph the supply and demand (price in y-axis and quantity in x-axis).

b. What is the equilibrium price and quantity in the market of orange?

c. What is the price elasticity of demand at the equilibrium? Is the demand elastic at this point?

d. What is the price elasticity of supply at the equilibrium? Is the supply elastic at this point?

continuing with Question 2. Suppose there is a frost that decreases the supply of orange by 20%.

a. Derive the new supply curve and graph it in your answer of Question 2a. Make sure you label each curve.

b. What is the new equilibrium price and quantity? How do they change from the old equilibrium in Q2?

c.What is theprice elasticity of supply at the new equilibrium? Is the supply became elastic at this point?