Answer: True
All the information will be in the book so that mean when you are taking the test you are able to see and find the answers
(A) The supply function generally is considered to have positive slope. Qa has positive slope. Qb has negative slope, so is probably the demand function.
supply function: Qa
demand function: Qb
(B) The equilibrium price is the price that makes supply equal to demand.
Qa = Qb
50 +p = 200 -4p
5p = 150
p = 30
The equilibrium price is 30.
(C) The price elasticity of supply is computed as
Es = (dQa/dp)·(P/Qa) = 1·p/(50+p)
Es = p/(50+p)
At p=30, the numerical value is Es = 30/80 = 3/8. Qualitatively, the supply is inelastic.
Both of the answers are examples of dangerous passing situations.
