Consider the market for van gogh paintings and assume no forgeries are possible.
A) Is the supply of van gogh prelatively elastic, relatively inelastic, unitarily elastic, perfectly elastic, or perfectly inelastic?
B) Suppose there are only 10 van gogh paintings in the world, and suppose the demand curve is Q=50-0.5P. Calculate the equilibrium price and quantity.
C) Suppose a fire destroys five of the paintings. Calculate the equilibrium price and equilibrium quantity.
D) Using a single supply and demand diagram, illustrate the market equilibrium in the market for van gogh paintings showing the outcome before and after the fire. Make sure to label your axes and curves.