Problem 02-03 Suppose the supply function for product X is given by QXS = – 30 + 2Px – 4Pz.

a. How much of product X is produced when Px = $600 and Pz = $60? b. How much of product X is produced when Px = $80 and Pz = $60? c. Suppose Pz = $60. Determine the supply function and inverse supply function for good X. Graph the inverse supply function.

Supply function:

Inverse supply function:

Problem 02-05 (Algo) The demand curve for product X is given by QXd = 340 – 4PX.

a. Find the inverse demand curve. b. How much consumer surplus do consumers receive when Px = $45? c. How much consumer surplus do consumers receive when Px = $30? d. In general, what happens to the level of consumer surplus as the price of a good falls?

Problem 02-06 (Algo) Suppose demand and supply are given by Qd = 60 – P and Qs = 1.0P – 20.

a. What are the equilibrium quantity and price in this market? Equilibrium quantity: Equilibrium price:

b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market.

Quantity demanded:

Quantity supplied:

Surplus:

c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $32 is imposed in the market. Also, determine the full economic price paid by consumers. Quantity demanded: Quantity supplied: Shortage:

Full economic price: $

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