Consider a simple one-commodity market model: Q = a-bP Q==c+dP with solutions: P* = and Q*...

 

Transcribed Image Text:

Consider a simple one-commodity market model: Q = a-bP Q==c+dP with solutions: P* = and Q* = a+c b+d ad-bc b+d (a, b > 0) (c,d > 0) " [demand] [supply] 1. Mathematically show using derivatives and explain in words what happens to Q* when a, b, c, and aq* d increases. (Hint: Find a aq* do* да'дь " дс əd 2. Confirm your answer in item (1) by illustrating the comparative statics in a supply and demand diagram. Consider a simple one-commodity market model: Q = a-bP Q==c+dP with solutions: P* = and Q* = a+c b+d ad-bc b+d (a, b > 0) (c,d > 0) " [demand] [supply] 1. Mathematically show using derivatives and explain in words what happens to Q* when a, b, c, and aq* d increases. (Hint: Find a aq* do* да'дь " дс əd 2. Confirm your answer in item (1) by illustrating the comparative statics in a supply and demand diagram.

Answer rating: 100% (QA)

1 Qabp Qbap ... View the full answer