Consider the following one-commodity market model Q ...

 

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Consider the following one-commodity market model Q <5 Q25 J2Q²-20Q+50 0 Pa(Q) P.(Q) = = 9Q where P(Q) is the inverse demand, P,(Q) is the inverse supply and Q20 is the quantity exchanged on the market. a) (8 pts) Calculate the equilibrium price and quantity. b) (8 pts) Graph the two functions indicating the intercepts and the intersection points. Put P on the vertical axis. Show the equilibrium. c) (5 pts) Assume a unit subsidy is introduced on this market. For a production Q, producers receive a price of Pa(Q) + s where s is the subsidy per unit sold. Show how the equilibrium changes (what happens to the equilibrium quantity, what happens to the price paid by consumers) on your previous graph and shows on the graph (the exact value of s is not specified, but assume it is greater than zero and not too large). Consider the following one-commodity market model Q <5 Q25 J2Q²-20Q+50 0 Pa(Q) P.(Q) = = 9Q where P(Q) is the inverse demand, P,(Q) is the inverse supply and Q20 is the quantity exchanged on the market. a) (8 pts) Calculate the equilibrium price and quantity. b) (8 pts) Graph the two functions indicating the intercepts and the intersection points. Put P on the vertical axis. Show the equilibrium. c) (5 pts) Assume a unit subsidy is introduced on this market. For a production Q, producers receive a price of Pa(Q) + s where s is the subsidy per unit sold. Show how the equilibrium changes (what happens to the equilibrium quantity, what happens to the price paid by consumers) on your previous graph and shows on the graph (the exact value of s is not specified, but assume it is greater than zero and not too large).

Answer rating: 100% (QA)

a Setting demand and supply equations equal to find equilibr... View the full answer