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

Expert's answer

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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