1. Consider the competitive market for trader joe's French brioche in Buffalo, The demand is given by Qd=100 - 5P,
The supply is Qs=10+4P,
a) Draw the supply and demand curve.
b) What are the equilibrium point (equilibrium price and quantity)?
c) Calculate the price elasticity of demand and price elasticity of supply at the equilibrium point, determine whether its elastic or inelastic?
d) Suppose another trader joe store will open in buffalo, increasing the supply of French brioche by 18 at any price, what will happen to the market clearing price and quantity (hint: what will be the new supply curve, what will be the new equilibrium point)
e) Suppose the government sets a price ceiling of $7 per unit of French brioche, will there be excess supply or excess demand? How much is it?