Demand for potatoes is given by Qd = 10 ?? 9P with Q measured in tons. The supply of potatoes is given by Qs = P2.
(a) Show the demand and supply functions on a graph, taking care to properly label both curves and both axes.
(b) Find the equilibrium price and quantity.
(c) Find the elasticity of demand and the elasticity of supply, evaluated at the equilibrium price and quantity. Is demand elastic, inelastic, or unit elastic? Is supply elastic, inelastic, or unit elastic?
(d) Solve for the elasticity of demand as a function of the market price. Draw this function for P 2 [1=3; 2=3].
(e) Suppose a (small) sales tax is imposed on potatoes. Would the burden of the tax fall mostly on consumers, mostly on producers, approximately equally, or is it impossible to tell from the information above?