If the demand function is Q = 110 - 20p, and the supply function is Q = 20 + 10p, what are the equilibrium price and quantity? M

*3.3 Green, Howitt, and Russo (2005) estimate the supply and demand curves for California processing tomatoes. The supply function is ln Q = 0.2

+ 0.55 ln p, where Q is the quantity of processing tomatoes in millions of tons per year and p is the price in dollars per ton. The demand function is ln Q = 2.6

- 0.2 ln p + 0.15 ln pt

, where pt is the price of tomato paste (which is what processing tomatoes are used to produce) in dollars per ton. In 2002, pt = 110. What is the demand function for processing tomatoes, where the quantity is solely a function of the price of processing tomatoes? Solve for the equilibrium price and the quantity of processing tomatoes (rounded to two digits after the decimal point). Draw the supply and demand curves (note that they are not straight lines), and label the equilibrium and axes appropriately. M 4. Shocking the Equilibrium: Comparative Statics