Answer the following questions: Suppose the demand for eggs is: Q = 9,000-2,000P
ID: 1219700 • Letter: A
Question
Answer the following questions:
Suppose the demand for eggs is: Q = 9,000-2,000P and the supply of eggs is: Q = - 1,000 + 3,000P, where quantity is measured in millions (of eggs). Find the market-clearing price and quantity for eggs. (Enter price responses rounded to two decimal places.) The market-clearing price is $ squarebox and the market-clearing quantity is squarebox million eggs. Now suppose the cost of producing eggs increases such that the supply curve for eggs shifts to Q = -2,000 + 3,000P. Find the market-clearing price and quantity for the product. The market-clearing price is $ squarebox and the market-clearing quantity is squarebox million eggs.Explanation / Answer
The equilibrium condition:
Demand = Supply
9,000 – 2,000P = -1,000 + 3,000P
5,000P = 10,000
P = 10,000 / 5,000
= 2
Putting P = 2 in either the demand function or supply function.
Q = 9,000 – 2,000P
= 9,000 – 2,000 × 2
= 9,000 – 4,000
= 5,000
Answer: Price is $2 and quantity is 5,000 millions.
The equilibrium condition:
Demand = Supply
9,000 – 2,000P = -2,000 + 3,000P
5,000P = 11,000
P = 11,000 / 5,000
= 2.2
Putting P = 2.2 in either the demand function or supply function.
Q = 9,000 – 2,000P
= 9,000 – 2,000 × 2.2
= 9,000 – 4,400
= 4,600
Answer: Price is $2.2 and quantity is 4,600 millions.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.