A vegetable fiber is traded in a competitive world market, and the world price is $9 per pound. Unlimited quantities are available for import into the United States at this price. The U.S. domestic supply and demand for various price levels are shown below.
|
Price
|
U.S. Supply
|
U.S. Demand
|
|
|
(million lbs.)
|
(million lbs.)
|
|
3
|
2
|
34
|
|
6
|
4
|
28
|
|
9
|
6
|
22
|
|
12
|
8
|
16
|
|
15
|
10
|
10
|
|
18
|
12
|
4
|
a. What is the equation for demand? What is the equation for supply?
b. At a price of $9, what is the price elasticity of demand? What is it at price of $12?