Describe inverse demand function, shift on the demand curve, elasticity of demand and supply and equilibrium price and quantity.
You head the introduction of a new drug, prilosec OCD is a version of prilosec OTC designed for obsessive compulsives with heartburn with(exactly I pill must be taken every 23 minutes precisely). You estimate that the demand curve is Q=500-1/2 P. Your cost accountants extimate that your supply curve is Q=-62.5+0.6925.5 P.
1.Are these inverted or prevented curves? How can you tell? If not already in inverse from, provide the inverted fourmulas.
2.Plot both together on a supply-demand graph. Calculate the equilibrium P and Q, and show them on your graph as well. Also calculate CS(consumer surplus) at the equlilibrium.
3. Illustrate what is the elasticity of demand for POTC at equilibrium? The elastiocity of supply (use the same fourmula as for elasticity of demand, but use of the supplycurve)? At this point, if you increased the price slightly, would total revenu increase or decrease? Explain.