Suppose the annual demand for gasoline as motor fuel in the US can be represented by the demand curve: Qd=125 - 10*P, where Qd is the quantity measured in billions of gallons, P is the price in dollars per gallon, and the supply curve is: Qs=-100 + 40*P . A) First, solve each equation for P, so that you can represent the inverse demand and the inverse supply on a graph with P on the vertical axis B) Now, draw the supply-demand graph, with P on the vertical axis. C) What is the equilibrium quantity of gasoline, in billions of gallons per year? The equilibrium quantity is D) What is the equilibrium price of gasoline?

Suppose the annual demand for gasoline as motor fuel in the US can be represented by the demand curve: Qd=125 - 10P, where Qd is the quantity measured in billions of gallons, P is the price in dollars per gallon, and the supply curve is: Qs=-100 + 40P . A) First, solve each equation for P, so that you can represent the inverse demand and the inverse supply on a graph with P on the vertical axis B) Now, draw the supply-demand graph, with P on the vertical axis. C) What is the equilibrium quantity of gasoline, in billions of gallons per year? The equilibrium quantity is D) What is the equilibrium price of gasoline?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.3P

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