Town A and town B have demands for mango given by the demand curves in Figure 1. Town A's curve is blue and dashed, town B's is red and solid. a) Each demand curve has a constant price elastic of demand. Find the price elasticity of demand for each town. Hint: both elasticities are whole numbers, and using the mid-point equation for price elasticity of demand from HW8 will provide you with more accurate estimates: Mid-point formula: ? = #!$#" %!$%" %? #' ?? = %!(%" ) and ?. = #!(#" ) (the average price and demand between the two points) b) If the supply of mangos for both towns is ?" = ?, what is equilibrium price and quantity for each town? c) If there is a mango blight reduces the supply of mangos, which city will have a larger change in equilibrium price? How does it relate to your answer in part a? d) Assume the blight changes the supply to ?" = ? ? 3. What are the new equilibrium price and quantity in each town? e) Which town had the larger reduction in producer surplus due to the mango blight?

Question 2: Town A and town B have demands for mango given by the demand curves in Figure 1. Town A's curve is blue and dashed, town B's is red and solid. a) Each demand curve has a constant price elastic of demand. Find the price elasticity of demand for each town. Hint: both elasticities are whole numbers, and using the mid-point equation for price elasticity of demand from HW8 will provide you with more accurate estimates: Mid-point formula: = 2 = + = Da+D p = p22p1 and D = 22 1 (the average price and demand between the two points) b) If the supply of mangos for both towns is Q. = p, what is equilibrium price and quantity for each town? c) If there is a mango blight reduces the supply of mangos, which city will have a larger change in equilibrium price? How does it relate to your answer in part a? d) Assume the blight changes the supply to Q; = p 3. What are the new equilibrium price and quantity in each town? e) Which town had the larger reduction in producer surplus due to the mango blight? Figure 1: Town A (blue, dash) and Town B (red, solid) demand curves for mangos