In the market for a good, the demand is perfectly elastic and the supply is perfectly inelastic.

The equation for demand is P = 15, and the equation for supply is Q = 612.

The government imposes a tax of $6 per unit.

Calculate the total producer incidence.

***

Correct answers will receive 1 mark.  Incorrect answers will

receive -0.75 mark.  An answer left blank will receive 0 marks.  So decide

carefully before you answer.***

Spinach and lettuce are substitutes for consumers. The price of lettuce is $1.70 each.  When units of spinach are $2.60 each, demand for lettuce is P = 5.7 - 0.002Q and when units of spinach are $2.70 each, demand for lettuce is P = 6.4 - 0.002Q.

Calculate the cross price elasticity of demand for spinach and lettuce.

***

Correct answers will receive 1 mark.  Incorrect answers will

receive -0.75 mark.  An answer left blank will receive 0 marks.  So decide

carefully before you answer.***

Consider a market in which supply is perfectly inelastic but demand is downward sloping.  If the government adds a tax the producer tax incidence will be $0.

The table below shows the supply schedule for a firm.

Calculate the price elasticity of supply between $7 and $8.

Demand for backpacks is given by the equation P = 140 - 0.01Q.

The price changes from $98 to $87.

Calculate the quantity effect.