suppose that there are 50 junkies in the market and their demand for crack cocai
ID: 1094999 • Letter: S
Question
suppose that there are 50 junkies in the market and their demand for crack cocaine is given by the following demand curve:
Q=1,000-0.10P
Where Q is the quantity demanded and P is the price paid. what is the choke price for crack cocain? Currently, each junky demands 2 units of the good. In perfectly competitive market, what price per unit is each junky paying? what is the price elasticity of demand? Suppose that the price dropped by 5 percent due to a good growing season of coca leaves. what is the new quantity demanded for each junky?
Suppose that the market for crack cocain is not perfectly competitive. Instead, two dealers have cornered the market for crack cocaine. Ace and Gary. Ace's supply of crack cocain is P=100+200Q Gary's supply of crack cocaine is P=700+100Q. what is the equilibrium price and quantity of crack cocaine?
Explanation / Answer
choke price : the lowest price at which the quantity demanded of a good is equal to zero.
Q=1,000-0.10P=0
p=10000
There are 50 junkies and every one buy 2. so net demand is 100
100=1000-.1P
P=9000
dQ/dP=.1 and Q/p =100/9000
price elsticity of demand = .1*p/Q= 9
new price = 9000-9000*5/100= 8550
Q= 1000-.1*8550 = 145 each junky need 2.9 units
2.
Ace's supply of crack cocain is P=100+200Q
Gary's supply of crack cocaine is P=700+100Q.
Market supply curve at fixed P= Qa+Qg=800+300Q
Market demand = Q=1,000-0.10P
1000-.1P=-8/3+P/300
.1033P = 3008/3
P=9706.35
Qa= 48.03, and Qg= 90.06
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.