The market for new vitamins is in equilibrium at 80 thousand units a month. Each one is sold for $500. Suppose the own price elasticity of demand for the new product is -0.8 and the price elasticity of supply is 1.5

1. Compute the slope and intercept coefficients for the linear supply and demand equations.

2. If the government imposed a per unit subsidy of $40, what would be the new equilibrium price and

   quantity of this medicine?

3. Calculate and illustrate the changes in consumer, produce and total surplus.

Answer rating: 100% (QA)

Market Analysis and Subsidy Impact on Vitamins Equilibrium Quantity Q 80000 unitsmonth Price P 500unit Price Elasticity of Demand PED PED 08 negative ... View the full answer