ECON 201 GMU Intermediate Microeconomics Questionnaire

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ECON 201
Homework 1
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
1) Suppose the market for grass seed can be expressed as
Demand: QD = 200 – 5p
Supply: Q S = 40 + 5p
If the government collects a $5 specific tax from sellers, how much will the quantity demanded change from the
amount demanded before the tax? What price will consumers pay after the tax? What price will sellers receive
after the tax? What is the tax revenue?
2) Suppose the market for potatoes can be expressed as follows:
Supply: Q S = -20 + 10p
Demand: QD = 400 – 20p
If the government sets a maximum price of $10 per unit, what will be the quantity demanded and quantity
supplied?
3) Suppose the demand function for a good is expressed as Q = 80 – 2p. If the good currently sells for $15, find the
price elasticity of demand. Also explain how the elasticity is expected to change if the price goes up above $15?
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microeconomics

market

tax revenue

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