Suppose the demand and supply curves of salt are given by:q D = 1,000

1.	Suppose the demand and supply curves of salt are given by:q D = 1,000 − p q S = 700 + 2p (a) Find the equilibrium price and quantity.(b) Now, suppose that the price of an input that used to produce salt has increased so, that the new supply curve isq S = 400 +2p How does the equilibrium price and quantity change? Does the change conform to your expectation?(c) Suppose the government has imposed a tax of Rs 3 per unit of sale on salt. How does it affect the equilibrium rice quantity?
Answer» EXPLANATION: Qd=1000-p Qs=700+2p Qd=Qs

Suppose the demand and supply curves of salt are given by:q D = 1,000 − p q S = 700 + 2p (a) Find the equilibrium price and quantity.(b) Now, suppose that the price of an input that used to produce salt has increased so, that the new supply curve isq S = 400 +2p How does the equilibrium price and quantity change? Does the change conform to your expectation?(c) Suppose the government has imposed a tax of Rs 3 per unit of sale on salt. How does it affect the equilibrium rice quantity?

Answer»

Qd=1000-p

Qs=700+2p

Qd=Qs