5. The generalized demand and supply functions for a commodity are QD=400-25 P+0.4 M+24 PR Qs...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
5. The generalized demand and supply functions for a commodity are QD=400-25 P+0.4 M+24 PR Qs 48+12 P-20 Pi + 20 F QD=quantity demanded; P = price of the commodity; M = average household income; PR = Price of related goods in consumption (complements or subsititutes); Qs = quantity supplied; P=Factor or input prices; F = Number of suppliers a. Initially, M= $61,140 and PR = $6. Find the "reduced" demand equation. b. Find the inverse demand function (in which P is a function of QD). c. Initially, Pr = $25 and F= 22. Find the "reduced" supply equation d. Find the inverse supply equation (in which P is a function of Qs). Will a price of $600 cause a shortage or surplus? How much? f. Find the market equilibrium price and quantity. Now, let the number of firms increase to 133. g. Find the new supply equation. What are the new equilibrium price and quantity. 5. The generalized demand and supply functions for a commodity are QD=400-25 P+0.4 M+24 PR Qs 48+12 P-20 Pi + 20 F QD=quantity demanded; P = price of the commodity; M = average household income; PR = Price of related goods in consumption (complements or subsititutes); Qs = quantity supplied; P=Factor or input prices; F = Number of suppliers a. Initially, M= $61,140 and PR = $6. Find the "reduced" demand equation. b. Find the inverse demand function (in which P is a function of QD). c. Initially, Pr = $25 and F= 22. Find the "reduced" supply equation d. Find the inverse supply equation (in which P is a function of Qs). Will a price of $600 cause a shortage or surplus? How much? f. Find the market equilibrium price and quantity. Now, let the number of firms increase to 133. g. Find the new supply equation. What are the new equilibrium price and quantity.
Expert Answer:
Answer rating: 100% (QA)
a To find the reduced demand equation we need to substitute the given initial values of M and PF into the demand function QD 400 25P 04M 24 PR Given M 61140 PF 6 Substituting the values into the deman... View the full answer
Related Book For
Managerial Economics and Strategy
ISBN: 978-0134167879
2nd edition
Authors: Jeffrey M. Perloff, James A. Brander
Posted Date:
Students also viewed these economics questions
-
The domestic demand and supply functions for a particular type of latex paint are Q d = 14 0.5p and Q s = 4 + p, respectively. The price is measured in dollars per gallon and the quantities are...
-
In Problems, assume that the populations are normally distributed and that independent sampling occurred. (a) Test the hypothesis that 1 2 at the a = 0.1 level of significance for the given sample...
-
What sequence of assembly-language instructions corresponds to the machine language instruction set you wrote in Exercise 14.9? Refer to Exercise 14.9, What sequence of machine-language instructions...
-
Melissa Vassar has decided to open a printing shop. She has secured two contracts. One is a five-year contract to print a popular regional magazine. This contract calls for 5,000 copies each month....
-
The isotopes magnesium-24 (mass \(3.983 \times 10^{-26} \mathrm{~kg}\) ) and magnesium-26 (mass \(4.315 \times 10^{-26} \mathrm{~kg}\) ) are to be separated using a mass spectrometer in which the...
-
Purchase Commitments Prophet Company signed a long-term purchase contract to buy timber from the U.S. Forest Service at $300 per thousand board feet. Under these terms, Prophet must cut and pay...
-
a) Explain the following accounting concepts: i. Business entity Revenue realization ii. Accruals iii. iv. V. Substance over form Conservatism vi. Going concern (6 Marks) b) Classify the following...
-
(a) A footballer's utility function is U(x)=x. He earns $100 million a year if he is healthy, there is a 20% probability that he will get injured and earn $O. Calculate the following: (i) Expected...
-
a) Describe in detail the All-event test to determine Income recognition for Accrual method taxpayer. When does an accrual taxpayer have to recognize an income in the scenario that the transaction...
-
First National Bank offers two-year CDs at 9.15% compounded daily, and citywide savings offers two-year CDs at 9.16% compounded quarterly. Compute the annual yield for each institution. (Round your...
-
A company provides the following budgeted and actual results for the month of December: Budgeted Fixed Selling Costs (based on a sales volume of 10,000 units): $101,589 Actual Fixed Selling Costs...
-
What is a bonds ex post or holding period return and why might it differ from its yield to maturity?
-
Mrs. Lam owned a flat in City Garden and rented out to Mr. Mason and his family under the following terms: Lease period: 18 months from 1 October 2018 Monthly rent: $6,800 payable at the beginning of...
-
An environmentalist wants to determine if the median amount of potassium (mg/L) in rainwater in Lincoln County, Nebraska, is different from that in the rainwater in Clarendon County, South Carolina....
-
In 2015, two U.S. senators proposed a temporary reduction on repatriated profits from 35% to 6.5%. Based on the Mini-Case, Profit Repatriation, would such a tax holiday cause a substantial inflow...
-
As in Question 7.3 of Chapter 14, Samanthas utility function is U(Y) = Y 0.5 . She tries to maximize her expected utility. She owns a car for business that she will have to replace if it is stolen....
-
A firms demand function is Q = 110 p + 2A 0.5 , where A is the amount of advertising undertaken by the firm and the price of advertising is one. The firms cost of production is C = 50 + 10Q + 2Q 2 ....
-
A probability experiment consists of rolling a single fair die. (a) Identify the outcomes of the probability experiment. (b) Determine the sample space. (c) Define the event E = roll an even number....
-
Sophia has three tickets to a concert, but Yolanda, Michael, Kevin, and Marissa all want to go to the concert with her. To be fair, Sophia randomly selects the two people who can go with her. (a)...
-
Suppose that a survey asked 500 families with three children to disclose the gender of their children and found that 180 of the families had two boys and one girl. (a) Estimate the probability of...
Study smarter with the SolutionInn App