See the following table, which is a segment of what is called a Demand and Supply...

 

Transcribed Image Text:

See the following table, which is a segment of what is called a Demand and Supply Schedule. For the purposes of this question, we will assume that the Demand and Supply curves that this data comes from are linear (i.e. straight lines). Price $10 $12 $14 $16 $18 Q Demanded 30 27 24 21 18 Q Supplied 5 7 9 11 13 Using the data above for the following two questions (Q6 & Q7). For these two questions, it is extremely important that you explain how you got to your answers. Writing the correct answer without any work or explanation for how you got there will give you 0.5/2 at a maximum: Write out an equation for the Demand Function in the form of: Q = a - bp. Write out an equation for the Supply Function in the form of: Q = c + dp. Solve for the free-market equilibrium prices (p*) and (Q*). Now suppose that firms begin a large advertising campaign to try to increase the demand for their goods. This campaign is successful, and it increased Demand for their product. This campaign increases the quantity demanded, at any given price, by 6 units. Given this demand increase, what is the new Demand Function and what would be the new free-market equilibrium prices (p*) and (Q*)? Suppose also though that this advertising is expensive, and increases the costs of the suppliers. These costs increase such that, for any given quantity, the minimum price that the firm would supply that quantity at increases by $2. Using this new supply curve, and your new demand curve from Q9, what would be the new Supply Curve and the new free-market equilibrium prices (p*) and (Q*)? See the following table, which is a segment of what is called a Demand and Supply Schedule. For the purposes of this question, we will assume that the Demand and Supply curves that this data comes from are linear (i.e. straight lines). Price $10 $12 $14 $16 $18 Q Demanded 30 27 24 21 18 Q Supplied 5 7 9 11 13 Using the data above for the following two questions (Q6 & Q7). For these two questions, it is extremely important that you explain how you got to your answers. Writing the correct answer without any work or explanation for how you got there will give you 0.5/2 at a maximum: Write out an equation for the Demand Function in the form of: Q = a - bp. Write out an equation for the Supply Function in the form of: Q = c + dp. Solve for the free-market equilibrium prices (p*) and (Q*). Now suppose that firms begin a large advertising campaign to try to increase the demand for their goods. This campaign is successful, and it increased Demand for their product. This campaign increases the quantity demanded, at any given price, by 6 units. Given this demand increase, what is the new Demand Function and what would be the new free-market equilibrium prices (p*) and (Q*)? Suppose also though that this advertising is expensive, and increases the costs of the suppliers. These costs increase such that, for any given quantity, the minimum price that the firm would supply that quantity at increases by $2. Using this new supply curve, and your new demand curve from Q9, what would be the new Supply Curve and the new free-market equilibrium prices (p*) and (Q*)?

Answer rating: 100% (QA)

Demand function in the form of Qabp We will use an extract of the given demand and supply t... View the full answer