Please answer question about price ceiling and Rule of Thumb?

Question

Q 1 The utilities commission in a city is currently examining pay telephone service in

the city. The commission has been asked to evaluate a proposal by a city

council member to place a $0.10 price ceiling on local pay phone service. The

staff economist at the utilities commission estimates the demand and supply

curves for pay telephone service as follows:

QD = 1600 - 2400P

QS = 200 + 3200P

Where P = price of a pay telephone call, and Q = number of pay telephone calls per month.

A. Determine the equilibrium price and quantity that will prevail without the price ceiling.

B. Analyze the quantity that will be available with the price ceiling (in thelong-run).

Q2 Determine the "rule-of-thumb" price when the monopolist has a marginal cost of $25 and the price elasticity of demand of - 3.0

Answer 1

1. A) $.25

    B) 520

2. I am not 100% sure about this...