Question

Using the supply and demand functions below, derive the demand and supply curves if Y = $55,000 and pc = $7. What is the equilibrium price and quantity of coffee? The demand function for coffee is Q = 8.5-p+ 0.01Y, where Q is the quantity of coffee in millions of pounds per year, p is the price of coffee in dollars per pound, and Y is the average annual household income in high-income countries in thousands of dollars. The coffee supply function is Q = 9.6 + 0.5p - 0.2pc, where pc is the price of cocoa in dollars per pound. The equilibrium price of coffee is p=$ per pound and the equilibrium quantity is Q= millions of pounds per year.

Answer 1

Ciren demand Q = 8.5-p + bodiely Supply Q = 9.6+0.5p-0.2 pc and also arren 'Y= 55,002 (thouder det Pc = $7 cernand 3 1 2=8.5-4 +0.69 (155) = 8.5-840.55 =9.05 -p Q=9.05-p] Supply = Q-9.6 70.5p - 0.2[7] 9.6 +0-50-14 TQ = 8.2 +0.607 at Equilibaum demand = Supply 9.05-p = 8.2 to sp 9.05-8.2=1.50 p=0.85/45 $8.57 pespound 04-03= 8.2 +0.5[9.53] =8.270.295 =80485 D = 8.49 million of Pounde peryear .:P = $0.57 per pound Q = 8:49 million