1. Suppose market demand is given asQd= a-bp and market supply is given asQs= c+dp and then find the following
   • Equilibrium price
   • Equilibrium quantity
   • Price elasticity of demand at equilibrium
   • Price elasticity of supply at equilibrium

Suppose that the equilibrium price of copper is 5 and the equilibrium quantity of copper is 20. At the market equilibrium, the price elasticity of demand for copper is -0.5, and the price elasticity of supply for copper is 1.0

a) Is the demand for copper elastic or inelastic at the market equilibrium? Explain briefly

b) Assume that the supply and demand curves are linear. Find the equations for supply and demand.

c) Suppose that the quantity of copper supplied at each price falls by 50%. What are the new equilibrium price and quantity?

d) What are the price elasticities of demand and supply at the new equilibrium?

Suppose the market demand for pizza is Qd = 300-20P and the market supply of pizza is Qs= -100 + 20 P where P= price (per pizza)

a. At equilibrium how many pizzas will be bought and sold? What is the equilibrium price? Calculate elasticity of demand and supply at equilibrium

b. What would happen if the sellers set the price at $15 per pizza? Calculate price elasticity of demand and supply at this point.

A. If demand is elastic, will a shift in supply have a larger effect on equilibrium quantity or on price?

B. If demand is inelastic, will a shift in supply have a larger effect on equilibrium price or on quantity?

C. If supply is elastic, will a shift in demand have a larger effect on equilibrium quantity or on price?

D. If supply is inelastic, will a shift in demand have a larger effect on equilibrium price or on quantity?

E. Would you usually expect elasticity of demand or supply to be higher in the short-run or in the long-run? Why?