Suppose the demand and supply curves of salt are given by: Qd = 1,000-p. Qs =...

 

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Suppose the demand and supply curves of salt are given by: Qd = 1,000-p. Qs = 700 +2p (a) Find the equilibrium price and quantity. (b) Now suppose that the price of an input used to produce salt has increased so that the new supply curve is: Qs = 400 + 2p How does the equilibrium price and quantity change? Does the change conform to your expectation? (c) Suppose the government has imposed GST which raises the cost by Rs.3 per unit of output. How does it affect the equilibrium price and quantity? Suppose the demand and supply curves of salt are given by: Qd = 1,000-p. Qs = 700 +2p (a) Find the equilibrium price and quantity. (b) Now suppose that the price of an input used to produce salt has increased so that the new supply curve is: Qs = 400 + 2p How does the equilibrium price and quantity change? Does the change conform to your expectation? (c) Suppose the government has imposed GST which raises the cost by Rs.3 per unit of output. How does it affect the equilibrium price and quantity?

Answer rating: 100% (QA)

ANSWER qd 1000 p 1 qs 700 2p 2 a At equilibrium ... View the full answer