Question

(30 points) Consider the market for video streaming described by the following demand and supply functions, where P and Q represent price and quantity of videos streamed and T is an exogenous variable measuring the impact of technological shocks on video streaming (T> 0 for a positive and T < 0 for a negative technology shock). Assume that α, β, δ, & μ are all positive constants and ф < 0: Use the above demand and supply equations to find expressions for the equilibrium price and quantity of videos streamed. a. What is the marginal impact of a change in the exogenous variable T on the equilibrium price and quantity of videos streamed? Be sure to specify whether your answers are positive or negative. Would your answers change if the technological shock goes from being good (T> 0 b. : 6. Assuming vel as in part (a) and the technology shock has been Let the constants have the following values: α-928, β-3.9-2, δ-2, and μ the market price is free to adjust to any le positive (T- 20), find the price elasticity of demand and price elasticity of supply at the equilibrium c.

Answer 1

18) dT 8+B) 8+P pr-928t 2-120-81°= 162. 448 443