Suppose the annual demand for gasoline as motor fuel in the US can be represented by the demand curve: Qd= XXXXXXXXXX*P, where Qd is the quantity measured in billions of gallons, P is the price in...


Suppose the annual demand for gasoline as motor fuel in the US can be represented by the demand curve: Qd=125 - 10*P, where Qd is the quantity measured in billions of gallons, P is the price in dollars per gallon, and the supply curve is: Qs=-100 + 40*P .



  1. A) First, solve each equation for P, so that you can represent the inverse demand and the inverse supply on a graph with P on the vertical axis

  2. B) Now, draw the supply-demand graph, with P on the vertical axis.


C) What is the equilibrium quantity of gasoline, in billions of gallons per year? The equilibrium quantity is



  1. D) What is the equilibrium price of gasoline?

  2. E) What is the amount of consumer surplus (CS), in billions of dollars, at the equilibrium price?

  3. F) What is the amount of producer surplus (PS), in billions of dollars, at the equilibrium price

  4. G) What is the total surplus (TS)?



Jun 07, 2022
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