Suppose there are two types of consumers in the Incheon chicken market, type A consumers and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suppose there are two types of consumers in the Incheon chicken market, type A consumers and type B consumers. The demand function of type A consumers is Qa=120 - 4P; the demand function of type B consumer is Qd = 80 - 2P, where Qa is the quantity of chicken, and P is the price of chicken. The supply function for chicken is Qs = 2P-30. The market of chicken is perfectly competitive. (1) (8 points) What is the total market demand function? (Consider all prices from zero to infinity, and write one or more functions that tell what quantity the total market will demand.) Show total market demand on a graph. At which price(s) does the market demand curve kink? (2) (8 points) What is the equilibrium price in the market? At this equilibrium price, how many chickens will type A consumers consume and how many chickens will type B consumers consume? For questions (3)-(4), suppose that because of a news report that bird flu is spreading in Incheon, type B consumers exit the market but type A consumers ignore the news reports and continue to demand chickens just as they did prior to the news report. Type A consumers become the ONLY consumer demanding chickens in the market. (3) (6 points) What will be the new equilibrium price and quantity in the market? What is the price elasticity of demand at the new equilibrium? (4) (8 points) The government decides to relieve the situation by paying a subsidy of 6 per unit of chicken to producers. What will be the price that consumers pay? How much will be the total subsidy? Suppose there are two types of consumers in the Incheon chicken market, type A consumers and type B consumers. The demand function of type A consumers is Qa=120 - 4P; the demand function of type B consumer is Qd = 80 - 2P, where Qa is the quantity of chicken, and P is the price of chicken. The supply function for chicken is Qs = 2P-30. The market of chicken is perfectly competitive. (1) (8 points) What is the total market demand function? (Consider all prices from zero to infinity, and write one or more functions that tell what quantity the total market will demand.) Show total market demand on a graph. At which price(s) does the market demand curve kink? (2) (8 points) What is the equilibrium price in the market? At this equilibrium price, how many chickens will type A consumers consume and how many chickens will type B consumers consume? For questions (3)-(4), suppose that because of a news report that bird flu is spreading in Incheon, type B consumers exit the market but type A consumers ignore the news reports and continue to demand chickens just as they did prior to the news report. Type A consumers become the ONLY consumer demanding chickens in the market. (3) (6 points) What will be the new equilibrium price and quantity in the market? What is the price elasticity of demand at the new equilibrium? (4) (8 points) The government decides to relieve the situation by paying a subsidy of 6 per unit of chicken to producers. What will be the price that consumers pay? How much will be the total subsidy?
Expert Answer:
Answer rating: 100% (QA)
1 The total market demand function can be represented as Qd 120 4P for Type A consumers 80 2P for Ty... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
Students also viewed these economics questions
-
Consider the problem a society faces if it wants to both maximize efficiency while also insuring that the overall distribution of happiness in the society satisfies some notion of equity. A: Suppose...
-
What is a UNIQUE constraint?
-
Barry consumes tacos and pepsi. The price of tacos is initially $4.00 per taco and the price of pepsi is $1.00 per can and Bary has $20.00 to spend. The marginal utility that each good yields is...
-
York's outstanding stock consists of 80,000 shares of noncumulative 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years...
-
The mast OA is supported by three cables. If cable AB is subjected to tension T, determine the tension in cables AC and AD and the vertical force F which the mast exerts along its axis on the collar...
-
According to Stefan's Law, the total radiation from a black body per second per unit area is proportional to: (a) \(\mathrm{T}\) (b) \(\mathrm{T}^{2}\) (c) \(\mathrm{T}^{3}\) (d) \(\mathrm{T}^{4}\)
-
Cohesive energy of bcc and fcc neon. Using the Lenard-Jones potential, calculate the ratio of the cohesive energies of neon in the bcc and fcc structures (Ans, 0.958). The lattice sums for the bcc...
-
List any four applications of KNN. Explain with Example
-
Two stations A and B of a road are 50 ft apart. Moreover, the fill parts of the two cross sections are on the opposite sides (left and right) of the two cross sections, while the cut parts are on the...
-
What is the percentage difference between the conversion rate and their opponents' conversion rate
-
What do we mean by a "linear programming model" and provide examples of 3 activities linear programming can be used for in management of organizations/activities.
-
A current through a straight wire is 1 0 A . At a certain distance from the wire, the magnetic field produced by this current - carrying wire is 0 . 4 x 1 0 ^-3 T . What is the distance from the wire?
-
How did Hauxi village manage to become so successful and when comparing it to major cities in China and other countries like north Korea and U.S.A w that would the differences be?
-
What are two recommended solution for a stronger US dollar, which is impacting earnings from overseas markets?
-
(b) Draw the most stable conformation of (2 marks) i. cis--3-methylcyclohexane. ii. trans-1-ethyl- cyclohexane. (c) Draw the structure of the following molecules (2 Marks) i. N- Methyl Butanamide ii....
-
A fast-food restaurant averages 150 customers per hour. The average processing time per customer is 90 seconds. a. Determine how many cash registers the restaurant should have if it wishes to...
-
Federal anti-trust laws prohibit many forms of collusion in price setting between firms. Labor unions, however, are exempt from anti-trust laws and are allowed to use market power to raise wages for...
-
Tax and Retirement Policy: In Chapter 3, we illustrated budgets in which a consumer faced trade-offs between working and leisuring now as well as between consuming now and consuming in the future. We...
-
Suppose that your tastes do not satisfy the convexity assumption. In particular, suppose the indifference curve corresponding to utility level uA has a shape like the indifference curves depicted in...
-
A national news organization developed the graphic shown in Figure 22 to illustrate the change in the highest marginal tax rate effective January 1, 2013. Why might this graph be considered...
-
The time-series graph in Figure 24 depicts the number of residents in the United States living in poverty. Why might this graph be considered misrepresentative? Approach Look for any characteristics...
-
A home security company located in Minneapolis, Minnesota, develops a summer ad campaign with the slogan When you leave for vacation, burglars leave for work. According to the city of Minneapolis,...
Study smarter with the SolutionInn App