Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows:

Price (dollars) Demand (millions) Supply (millions)

60 22 14

80 20 16

100 18 18

120 16 20

a. Calculate the price elasticity of demand when the price is $80 and when the price is $100.

b. Calculate the price elasticity of supply when the price is $80 and when the

price is $100.

c. What are the equilibrium price and quantity ?

d. Suppose the government sets a price ceiling of $80. Will there be a shortage,

and if so, how large will it be ?

How should the environmental effects be dealt with when evaluating this project? the environmental effects should be ignored since the plant is legal without mitigation. the environmental effects should be treated as a sunk cost and therefore ignored. if the utility mitigates for the environmental effects, the project is not acceptable. however, before the company chooses to do the project without mitigation, it needs to make sure that any costs of "ill will" for not mitigating for the environmental effects have been considered in the original analysis. the environmental effects should be treated as a remote possibility and should only be considered at the time in which they actually occur. the environmental effects if not mitigated would result in additional cash flows. therefore, since the plant is legal without mitigation, there are no benefits to performing a "no mitigation" analysis.