[15 pts]
Suppose the demand for coffee is given by the following equation: Q^(d)=280-40P and the supply equation is Q^(s)=80+10P, where P is the price in dollars and Q^(d) and Q^(s) respectively, are quantity demanded and quantity supplied.
a. Derive the supply and demand curves. Determine the equilibrium price and equilibrium quantity of coffee.
b. Suppose a price ceiling of $2.50 is imposed on the market, compute the quantity demanded and the quantity supplied. What is the difference called?
c. Suppose an excise tax of $2.00 per unit is imposed on the seller. Determine the new equilibrium price and quantity. What price will the seller receive?
[15 pts] l1. Suppose the demand for coffee is given by the following equation: Qd=280-40P and the supply equation is Q'=80+10P, where P is the price in dollars and Q" and Q' respectively, are quantity demanded and quantity supplied. a. Derive the supply and demand curves. Determine the equilibrium price and equilibrium quantity of coffee. b. Suppose a price ceiling of $2.50 is imposed on the market, compute the quantity demanded and the quantity supplied. What is the difference called? c. Suppose an excise tax of $2.00 per unit is imposed on the seller. Determine the new equilibrium price and quantity. What price will the seller receive?