Question:

1. An individual seller's supply function for rice per month in a small town is given by the equation Q; = -80 + 100P - 2W where Q; is kilos per month supplied, P. is the price of rice per kilo, and W is the wage rate in euros that it must pay its labourers. Assume that the price of rice per kilo is 61.5 and wage is (10. The supply side of the market consists of a total of forty identical sellers in this competitive market. a. Determine the inverse market supply function and interpret. b. The aggregate demand is given by the equation QF = 2334 - 500P, + 101 + 8Ps, where Q represents the market quantity demanded in kilos per month, / equals the household income in 61,000s, and A equals the average price of spaghetti per kilo. Assume that the household income is 40, and the price of spaghetti is (2. Determine the equilibrium price and quantity of rice in this market and identify the exogenous variables. c. Determine the amount of excess demand or supply if price is El and characterize the local market for rice. d. Calculate the amount of deadweight loss and the total surplus that would result from a price floor imposed at a level of 63. Interpret. e. Determine the price elasticity of demand at the market equilibrium and interpret.f. Characterize rice, and rice and spaghetti using the income elasticity of demand and the cross-price elasticity, respectively