Equilibrium

16.1 This problem will be easier if you have done Problem 16.3.The inverse demand function for grapefruit is defined by the equation p = 2967q, where q is the number of units sold. The inverse supply function is defined by p = 17 + 2q. A tax of 27 is imposed on suppliers for each unit of grapefruit that they sell. When the tax is imposed, the quantity of grapefruit sold falls to (a) 31. (b) 17.50. (c) 26. (d) 28. (e) 29.50.

16.2 In a crowded city far away, the civic authorities decided that rents were too high. The long-run supply function of two-room rental apartments was given by q = 18 + 2p and the long run demand function was given by q = 114 4p where p is the rental rate in crowns per week.

The authorities made it illegal to rent an apartment for more than 10 crowns per week. To avoid a housing shortage, the authorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How much would the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?

(a) 9 (b) 15 (c) 18 (d) 36 (e) 27

16.3 Suppose that King Kanuta from Problem 16.11 demands that each of his subjects gives him 4 coconuts for every coconut that the subject consumes. The king puts all of the coconuts that he collects in a large pile and burns them. The supply of coconuts is given by S(ps) = 100ps, where ps is the price received by suppliers. The demand for coconuts by the king's subjects is given by D(pd)=8, 320 100pd, where pd is the price paid by consumers. In equilibrium, the price received by suppliers will be (a) 16. (b) 24. (c) 41.60. (d) 208. (e) None of the other options are correct.

16.4 In Problem 16.6, the demand function for Schrecklichs is 2004PS 2PL and the demand function for LaMerdes is 200 3PL PS, where PS and PL are respectively the price of Schrecklichs and LaMerdes. If the world supply of Schrecklichs is 100 and the world supply of Lamerdes is 90, then the equilibrium price of Schrecklichs is

(a) 8. (b) 25. (c) 42. (d) 34. (e) 16