Refer to Figure 22.3 below. Suppose that the supply curve is constant at $10. Suppose further that the before-tax demand curve D B can be written as B = 20 - P/2, where B is the number of structures per year and P is the price.
(A) Insert $10 into before-tax demand equation, and solve for B, B 0 = 20 - 10/2. B 0 = 15.
(B) Insert $10 into after-tax demand equation, and solve for B, to get B = 20 - 10 = 10. To find
, put the quantity 10 into before-tax demand equation, and solve for P = 40 - 2B = 20.
Economics
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The demand for a new effective drug for the cure of AIDS would most likely be
A. elastic. B. unit elastic. C. perfectly elastic. D. highly inelastic.
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