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The market for new vitamins is in equilibrium at 80 thousand units a month. Each one...

The market for new vitamins is in equilibrium at 80 thousand units a month. Each one is sold for $500. Suppose the own price elasticity of demand for the new product is -0.8 and the price elasticity of supply is 1.5

  1. Compute the slope and intercept coefficients for the linear supply and demand equations.

  2. If the government imposed a per unit subsidy of $40, what would be the new equilibrium price and

    quantity of this medicine?

  3. Calculate and illustrate the changes in consumer, produce and total surplus.

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