Question: Question 2 - 20 marks Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows:

Question 2 - 20 marks Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows: Price (dollars) Demand (millions) Supply (millions) 60 22 14 80 20 16 100 18 18 120 16 20 a. Calculate the price elasticity of demand when the price is $80 and $100. (5 marks) b. Calculate the price elasticity of supply when the price is $80 and $100. (5 marks) C. What are the equilibrium price and quantity? (5 marks) d. Suppose that the government sets a price ceiling of $80. Will there be a shortage, and if so, how large will it be?

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