Q3 [110 points] Suppose that an estimated monthly demand and supply functions for apples in the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Q3 [110 points] Suppose that an estimated monthly demand and supply functions for apples in the U.S. are given by: Q=200-40 p + 20 p +0.015Y Q=85 +35 p-20 pj where Qis the quantity of apples demanded in tons per month; p is the price of apples in US dollars per kilogram; p, is the price of quince (a substitute good) in dollars per kilogram; Y is the income of consumers per month in thousand dollar; Q is the quantity of apples supplied in tons per year; p is the price of fertilizer (an input) in dollars. And suppose further that p, is $2 per kilogram; Y is 4000 per month; P is $0.50 per kilogram. AZ.nb 3 Answer the following questions. a) Draw the demand curve for apples. You should be very precise and accurate in your drawing, especially when showing the price and quantity intercept values on the diagram. b) Calculate the responsiveness of a change in the quantities demanded to a unit change in the price (i.e., show how the quantities demanded would change if the price changes by a unit). Explain your answer. c) Write the inverse demand function and calculate the slope of the demand curve. What does it tell us regarding the relationship between the price of apple and the quantities demanded. Explain your result. d) How would the demand curve shift if per capita income increases from $4000 to $6000 per month. Show the change on a new diagram. e) Draw the supply curve for apples. You should be very precise and accurate in your draw- ing, especially when showing the price and quantity intercept values on the diagram. f) Calculate the responsiveness of a change in the quantities supplied to a unit change in the price (i.e., show how the quantities supplied would change if the price changes by a unit). Explain your answer. g) Calculate the slope of the supply curve. What does it tell us regarding the relationship between the price of apple and the quantities demanded. Explain your result. h) How would the supply curve shift if the price of fertilizer (p) rises from $0.5 to $1 per kilogram. Show the change on a new diagram. i) Show the market equilibrium for apples on a diagram. P, = $2 per kilogram; Y = $4000; p = $0.50 per kilogram per month What is the equilibrium quantity? What is the equilibrium price? What is the total revenue created in the apple market? j) Calculate the amount of surplus/shortage at a price of $2 per kilogram. p, = $2 per kilogram; Y = $4000; p = $0.50 per kilogram per month Explain how market forces will tend to make price and quantity move toward the equilib- rium point. k) Calculate the amount of surplus/shortage at a price of $4 per kilogram. P= $2 per kilogram; Y = $4000; p = $0.50 per kilogram per month Explain how market forces will tend to make price and quantity move toward the equilib- rium point. Q3 [110 points] Suppose that an estimated monthly demand and supply functions for apples in the U.S. are given by: Q=200-40 p + 20 p +0.015Y Q=85 +35 p-20 pj where Qis the quantity of apples demanded in tons per month; p is the price of apples in US dollars per kilogram; p, is the price of quince (a substitute good) in dollars per kilogram; Y is the income of consumers per month in thousand dollar; Q is the quantity of apples supplied in tons per year; p is the price of fertilizer (an input) in dollars. And suppose further that p, is $2 per kilogram; Y is 4000 per month; P is $0.50 per kilogram. AZ.nb 3 Answer the following questions. a) Draw the demand curve for apples. You should be very precise and accurate in your drawing, especially when showing the price and quantity intercept values on the diagram. b) Calculate the responsiveness of a change in the quantities demanded to a unit change in the price (i.e., show how the quantities demanded would change if the price changes by a unit). Explain your answer. c) Write the inverse demand function and calculate the slope of the demand curve. What does it tell us regarding the relationship between the price of apple and the quantities demanded. Explain your result. d) How would the demand curve shift if per capita income increases from $4000 to $6000 per month. Show the change on a new diagram. e) Draw the supply curve for apples. You should be very precise and accurate in your draw- ing, especially when showing the price and quantity intercept values on the diagram. f) Calculate the responsiveness of a change in the quantities supplied to a unit change in the price (i.e., show how the quantities supplied would change if the price changes by a unit). Explain your answer. g) Calculate the slope of the supply curve. What does it tell us regarding the relationship between the price of apple and the quantities demanded. Explain your result. h) How would the supply curve shift if the price of fertilizer (p) rises from $0.5 to $1 per kilogram. Show the change on a new diagram. i) Show the market equilibrium for apples on a diagram. P, = $2 per kilogram; Y = $4000; p = $0.50 per kilogram per month What is the equilibrium quantity? What is the equilibrium price? What is the total revenue created in the apple market? j) Calculate the amount of surplus/shortage at a price of $2 per kilogram. p, = $2 per kilogram; Y = $4000; p = $0.50 per kilogram per month Explain how market forces will tend to make price and quantity move toward the equilib- rium point. k) Calculate the amount of surplus/shortage at a price of $4 per kilogram. P= $2 per kilogram; Y = $4000; p = $0.50 per kilogram per month Explain how market forces will tend to make price and quantity move toward the equilib- rium point.
Expert Answer:
Answer rating: 100% (QA)
Here is a stepbystep solution with workings a Demand curve for apples QD 200 40p 20pq 0015Y Substitu... View the full answer
Related Book For
Mathematical Applications for the Management Life and Social Sciences
ISBN: 978-1305108042
11th edition
Authors: Ronald J. Harshbarger, James J. Reynolds
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...
-
Suppose that the demand and supply functions for good X are Q d = 50 - 8P Q s = -17.5 + 10P a. What are the equilibrium price and quantity? b. What is the market outcome if price is $2.75? What do...
-
The market demand and supply functions for corn are the same as in exercise 15.1. Suppose the government wants to raise the price of corn to $3. What are the welfare effects of a price floor, price...
-
SAE 10 oil at 20C flows in a vertical pipe of diameter 2.5 cm. It is found that the pressure is constant throughout the fluid. What is the oil flow rate in m3/h? Is the flow up or down?
-
After evaluating a capital budgeting project, Susan discovered that the projects NPV > 0. What does this information tell us about the projects IRR and DPB? Can anything be concluded about the...
-
Write down the uncovered interest rate parity condition. Explain, in your own words, what it means intuitively. (5 points) Suppose we were to run a Fama regression" of the form log S log S = a+ (,...
-
Euclid Corporation is subject to the book minimum tax. It has the following adjusted financial statement incomes (before the adjustment for prior financial statement losses): All four of these years...
-
Bergan Brewery uses the latest in modern brewing technology to produce a prize-winning beer. In both 2008 and 2009, Bergan produced and sold 100,000 cases of beer and had no raw materials, work in...
-
On May 20, the board of directors for Auction.com declared a cash dividend of 50 cents per share payable to stockholders of record on June 14. The dividends are paid on July 14. The company has...
-
Starting with the finished version of Example 9.3, change the fixed marketing cost to $4000 (really $4 million) in cell B5, and change the decision criterion to maximize expected utility, using an...
-
You estimate that you will owe $45,300 in student loans when you graduate. The interest rate is 4.25 percent. If you want this debt to be paid in full ten years from now, how much must you pay each...
-
The amount of time it takes to develop a product and have it available for sale is order visibility. time to market. product returnability. response time.
-
In order to reap the greatest return from the online channel for physical goods, firms should maximize the return for each distinct supply chain member. minimize interactions between the buyer and...
-
Which of the following would be a DISADVANTAGE of manufacturer storage with direct shipping? The ability to reduce cost of inventory by centralizing inventories at the manufacturer. The manufacturer...
-
Weekly demand for paper towels at a Target store is normally distributed, with a mean of 1,000 and a standard deviation of 300. The supplier takes two weeks to supply a Target order, which is for a...
-
Weekly demand for shampoo at a EUROSPAR supermarket is normally distributed, with a mean of 2,800 and a standard deviation of 1,000. The store manager, who continuously monitors the inventory, orders...
-
Assume my current retirement account has $100,000 invested in the the S&P500. You are my Financial advisor and I need you to provide me with a plausible range for my investment by the end of my...
-
Why do CPA firms sometimes use a combination of positive and negative confirmations on the same audit?
-
Suppose that the supply function for a good is p = 0.1x2 = 3x + 20. If the equilibrium price is $36 per unit, what is the producer's surplus there? In the following equation p is in dollars and x is...
-
Prior to an election, a poll of 1200 citizens is taken. Suppose 557 plan to vote for A, 533 plan to vote for B, and the remainder indicate they will not vote. (a) If the poll is accurate, find the...
-
The mean weight of a group of boys is 160 lb, with a standard deviation of 15 lb. If the weights are normally distributed, find the probability that one of the boys picked at random from the group...
-
Elm City is considering a replacement for its police radio. The benefits and costs of the replacement are shown below. What is the replacement's benefit/cost ratio if the effective annual interest...
-
True or False: Benefits and disbenefits must be converted to monetary values to use benefit-cost analysis.
-
Using an Internet-based search on 'build operate transfer," find an additional definition from a source other than used in Section 14.2. Copy and paste it, as well as any graphics, examples,...
Study smarter with the SolutionInn App