Problem Set 2 ΜΆ Supply and Demand Question 1
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- Question 22
- Question 24
- Question 25
- Question 26
| Question 21 As part of US. sugar policy (in 2013), the government offered to buy raw sugar from domestic sugarcane mills at an average price of 18.75 cents per pound. The government offer was made for as much raw sugar as sugar mills produced. Any raw sugar purchased by the government was not sold in the domestic market, as this might have caused raw sugar prices to fall. The price of 18.75 cents per pound was above the equilibrium price. a. Under this policy, what do you think the governmentβs demand curve for sugar looks like b. What impact does this policy likely have on domestic sugar prices Question 22 Suppose demand in a market is described by the equation ππ π·π· = 6 β ππ. a. Sketch demand. b. Write out the demand schedule for each integer price up to $6: ($0, $1, $2, . . . , $6). Question 23 The demand for computers is ππ π·π· = 15β 2ππ, where Pis the price of computers. Initially, the supply of computers is ππ ππ = ππ. a. Find the original equilibrium price and quantity. b. Suppose the prices of memory chips and motherboards (two important components in computers) rise and as a consequence, the supply curve for computers becomes ππ ππ = β3 + ππ. Find new equilibrium price and quantity. Question 24 a. Lower material costsβindeed lower costs of any kindβmake production more profitable. Starting at point A, what is the new equilibrium b. Starting from point A, how do the firms in the market react when the price of coffee increases from $6.00 to $7.50 per pound Question 25 The demand for books is ππ π·π· = 120 β ππ The supply of books is πππ π = 5ππ a. What is the equilibrium price of books b. What is the equilibrium quantity of books sold c. If P = $15, which of the following is true Question 26 The inverse demand curve for product Xis given by ππ π₯π₯ = 25 β 0.005ππ + 0.15ππ π¦π¦ , where represents price in dollars per unit, Q represents rate of sales in pounds per week, and represents selling price of another product Yin dollars per unit. The inverse supply curve of product Xis given by ππ π₯π₯ = 5 + 0.004ππ. a. Determine the equilibrium price and sales of X. Let ππ π¦π¦ = $10. b. Determine whether X and Y are substitutes or complements. Download 383.12 Kb. Share with your friends:
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