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Suppose the Market for Grass Seed Can Be Expressed As

Question 115

Essay

Suppose the market for grass seed can be expressed as:
Demand: QD = 100 - 2p
Supply: QS = 3p
At the market equilibrium,calculate the price elasticities of supply and demand.Use these numbers to predict the change in price resulting from a specific tax.

Correct Answer:

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At p = 20 Q = 60,e = -2 ∗ (20/...

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