Consider the market for apple juice. In this market, the supply curve is given by Qs...

  

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Consider the market for apple juice. In this market, the supply curve is given by Qs = 10PJ -5PA and the demand curve is given by Qp = 100-15P J +10PT, where J denotes apple juice, A denotes apples, and T denotes tea. a. Assume that PA is fixed at 1 and PT = 5. Calculate the equilibrium price and quantity in the apple juice market (10 marks); b. Suppose that a poor harvest season raises the price of apples to PA = 2. Find the new equilibrium price and quantity of apple juice (10 marks); c. Draw a graph to illustrate your answers (10 marks). Qs = 10PJ - 5PA Qd = 100-15PJ + 10PT a) PA = 1 PT = 5 Qs = 10PJ - 5 Qd = 100-15PJ +10*5 = 150-15PJ For equllibrium Qd = Qs 150-15PJ = 10PJ -5 155 = 25PJ %3D PJ = 155/25 = 6.2$ Equllibrium price of apple juice = 6.2S Equllibrium quantity = 10PJ -5 = 10*6.2-5 = 57 b) PA = 2 PT = 5 Qs = 10PJ -5*2 = 10PJ -10 Consider the market for apple juice. In this market, the supply curve is given by Qs = 10PJ -5PA and the demand curve is given by Qp = 100-15P J +10PT, where J denotes apple juice, A denotes apples, and T denotes tea. a. Assume that PA is fixed at 1 and PT = 5. Calculate the equilibrium price and quantity in the apple juice market (10 marks); b. Suppose that a poor harvest season raises the price of apples to PA = 2. Find the new equilibrium price and quantity of apple juice (10 marks); c. Draw a graph to illustrate your answers (10 marks). Qs = 10PJ - 5PA Qd = 100-15PJ + 10PT a) PA = 1 PT = 5 Qs = 10PJ - 5 Qd = 100-15PJ +10*5 = 150-15PJ For equllibrium Qd = Qs 150-15PJ = 10PJ -5 155 = 25PJ %3D PJ = 155/25 = 6.2$ Equllibrium price of apple juice = 6.2S Equllibrium quantity = 10PJ -5 = 10*6.2-5 = 57 b) PA = 2 PT = 5 Qs = 10PJ -5*2 = 10PJ -10