Question

Refer to the equations of Question 1. Assume Angie and Benny are the only two people in the cookie market. a) Write down the market demand function(s) and market supply function, and draw the market demand and supply curves in one graph. b) Solve for the market equilibrium price and quantity. c) How many cookies does each of them consume? d) How many cookies are traded? e) Solve for the consumer surplus and seller surplus.

#10. Angie has 12 cookies, and a marginal value curve described by P = 45-3QA while Benny has 0 cookies, and a marginal value curve described by P = 44- 2QB a. Draw a three sided trade diagram, with Benny's marginal value curve going from left to right, and Angie's going from right to left. Be careful to state how wide the diagram is in terms of units of cookies. Draw both marginal value curves in this diagram. 4Xc b. How might we interpret Angie's marginal value curve in this context? What are their marginal values before trade? c. After trade, how many cookies do each of them have? What is the marginal value of each person after trade? d. If we assume that all cookies traded at a price equal to the final marginal values, what are the consumer and seller surplus from trade! 11. If a nasty insect hanpen.

Answer 1

ap Market demama : Now for A : P 45 3 A A 15-P 41.4 A 30 for B P 44 - 2 6B В 2 2 P 12 22-P Thum 37 P Marka n fixud at ā z 12 supp b) Ai eui libri um O 3- 6 P 12 1P ' P = 30 .*. & 12 SA = 15-(a) - 3 5 AH this price of cookies draded mamioee The e ) Swcpwo The Consumex A=. x (44 30)x12 864 Surpun The seuer = 360 30 X 12