Answer to Question #109136 in Microeconomics for m.saad farooq khan

Question #109136
suppose the markets for grass seed can be follow as demand 100-2p ,supply =3p at the equilibrium ,calculate the price elasticities of demand and supply?what would happen with quantitiy demand if the price reach 30 ?price reach 50
1
Expert's answer
2020-04-15T09:23:06-0400

Since the market is in equilibrium

"100-2P=3P"

"P=20; S1=D1=60"

Suppose P=30 (+50%), then S2=90 (+50%) and D2=40 (-33.3%)

"Price Elasticity Of Demand =\\Delta Q\/\\Delta P" =-33%/50%=-0.66

"Price Elasticity of Supply = \\Delta Qs\/\\Delta P" = 50%/50%=1

if P=30, D=40; if P=50, D=0


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