Please
answer the following questions. Submit
as a Microsoft Word® document to the Dropbox when completed.
1. Explain
what would happen to equilibrium price and quantity in the market for Pepsi if
the following occurred (be sure to indicate WHY it happens as well):
a. The
price of Coke decreases.
b. Average
household income falls from $50,000 to $43,000
c. There
are improvements in soft-drink bottling technology.
d. The
price of sugar increases and the Pepsi launches an extremely successful
advertising campaign.
2. Use
the following equations for demand and supply to solve for market equilibrium
price and quantity:
Demand: Qd = 100 –
4P
3. Using the diagram below, answer the following
questions:
a. How
much is the per-unit tax on cigarettes?
b. What
price do consumers pay after the tax?
c. How
much tax revenue is collected?
d. What
is the amount of deadweight loss?