Suppose the demand and supply curves for basketballs are given by:
Qd = 200 – 5P
Qs = -20 + 6P.
Using the demand and supply functions above, the equilibrium price of a basketball is ____, and the equilibrium quantity is ____. Illustrate your answer.
Compute price elasticity of demand and supply at the equilibrium price and quantity. Price elasticity of demand is equal to___ _ and price elasticity supply is equal to ____.
On the same graph above, show the effect on equilibrium price and quantity of a) an increase in the price of rubber used to make basketballs, and b) changing preferences of kids to playing more soccer.
From the demand and supply curves given above, compute CS, PS, and aggregate surplus. Illustrate on Graph.