Using the supply and demand functions below, derive the demand and supply curves if Y=$55,000 and pc
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Question:
Using the supply and demand functions below, derive the demand and supply curves if Y=$55,000 and pc = $99. What is the equilibrium price and quantity of coffee?
The demand function for coffee is
Q = 8.5 − p + 0.01Y,
where Q is the quantity of coffee in millions of pounds per year, p is the price of coffee in dollars per pound, and Y is the average annual household income in high-income countries in thousands of dollars.
The coffee supply function is
Q = 9.6 + 0.5p - 0.2pc,
where pc is the price of cocoa in dollars per pound.
The equilibrium price of coffee is p = $0.97 per pound and the equilibrium quantity is Q = 8.09 millions of pounds per year.
Related Book For
Financial Algebra advanced algebra with financial applications
ISBN: 978-0538449670
1st edition
Authors: Robert K. Gerver
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