Economics: Demand, Supply, Taxation and Market Equilibrium

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Course ID

ECONOMICS1
Table of Contents
Part 1..........................................................................................................................................2
Answer 1................................................................................................................................3
Answer 2................................................................................................................................3
Answer 3................................................................................................................................3
Part 2..........................................................................................................................................3
Answer 1................................................................................................................................4
Answer 2................................................................................................................................5
Answer 3................................................................................................................................5
Answer 4................................................................................................................................5
Part 3..........................................................................................................................................5
Answer 1................................................................................................................................6
Answer 2................................................................................................................................6
Answer 3................................................................................................................................7
References..................................................................................................................................8

ECONOMICS2
Part 1
The demand function for bus trips is given as
D1=2000−200 P1+50 P2 +2 Y
D1: Annual demand for bus trips
P1: Price of bus trips
P2: Price of train trips
Y: average annual income
Given that annual average income is $70, 000 and the price of train trips is $330, the demand
function for bus trips is given as
D1=2000−200 P1+ ( 50 × 330 ) + ( 2× 70,000 )
¿ 2000−200 P1 +16500+140000
¿ 158500−200 P1
The supply of bus trips is given as
S1=300 P1
Equilibrium in the market for bus trips occurs where demand matches with supply (Kreps,
2019). That is
D1=S1
¿ , 158500−200 P1=300 P1
¿ , 500 P1=158500
¿ , P1=317