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# Demand and Supply curve: Equilibrium price, price elasticity

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1. Suppose the market demand curve for a Product is given by Q = 250 - 5P and the market supply curve is given by Q = -50 + 25P.
1. What are the equilibrium price and quantity in this market?
2. At the market equilibrium, what is the price elasticity of demand?
3. Suppose the price in this market is \$8. What is the amount of excess demand?

2. Suppose the market demand curve for a product is given by Q = 500 - 156P + 20I and the market supply curve is given by Q = -25 + 10P - 10K. Assume initially that I= 10 and K = 5.
1. What are the equilibrium price and quantity in this market?
2. What are the endogenous and exogenous variables in the equilibrium model?
3. Suppose K suddenly increases to 20. How will this affect the market equilibrium calculated in part 1?

3. Suppose demand for good A is given by Q = 500 - 10Pa + 2Pb + 0.70I where Pa is the price of Good A, Pb is the price of some other good B, and I is income. Assume that Pa is currently \$10, Pb is currently \$5, and I is currently \$100.
1. What is the elasticity of demand for good A with respect to the price of good A at the current situation.
2. What is the cross price elasticity of the demand for good A with repect to the price of good B at the current situation?
3. What is the income elasticity of demand for good A at the current situation.

4. Suppose the market demand curve for a product is given by Q = 500 - 5P and the market supply curve is given by Q = 20P
1. What are the equilibrium price and quantity in this market?
2. Now suppose that the new demand curve for the same product is given by Q = 1000 - 5P and the market supply curve remains unchanged. What are the new equilibrium price and quantity in this market.