a. Shut down point (p,sp)=(7,5.175)
Producers are willing to supply 5.175 million units at price of $7 per unit. Below $7 producers will shut down.
Reason- In the supply equation,
we can see when P=7,S(p)=0
So this is the shut down point. When p=7, S(p)= 3(1.081^7)=5.175
b. (p*,q*)=(19.853, 14.802)
At a price of $19.853, Producers are willing to produce exactly 14.802 million units which consumers are willing to purchase.
reason- At Equilibrium
35-7Inp=3(1.081^p)
p*=19.853
q*=14.802
b.
S(p) = 0 for p A demand function and a supply function for the same commodity...
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