We know Under Equilibrium :-
Quantity Demanded = Quantity Supplied
So we can substitute quantity supplied D = 100 and E = 200 in the Demand function
So we can see,
Initially when D = 100 and E = 200
After when D = 200 and E = 100
Hence, After the increase in supply of Diamond to 200 units both prices of Diamond and Emerals fell by 200.
Suppose households consider diamonds (D) and emeralds (E) as substitutes. Let the supply of both be fixed in the market...
Partial Competitive Equilibrium 3. Suppose households consider diamonds (D) and emeralds (E) as substitutes. Let the supply of both be fixed in the market period at D = 100 and E = 200. The inverse demand functions for diamonds and emeralds are give by: po = 450 – D + 1/2pE pe = 300-E + PD b. Assume that a new discovery of diamonds increases the quantity supplied to 200 units. How will this affect the equilibrium prices?
Partial Competitive Equilibrium Suppose households consider diamonds (D) and emeralds (E) as substitutes. Let the supply of both be fixed in the market period at D 100 and E 200. The inverse demand functions for diamonds and emeralds are give by: 3. Po 450 - D + 1/2pE PE= 300 - E pD What are the equilibrium prices of diamonds and emeralds? а.
1. Suppose that the initial demand and supply curves for coffee are illustrate by D' and St in the graph below. Assume that coffee and kringle are complements in consumption. Clearly label all additions to the graph. a) Suppose that the initial market price of coffee, Po, is $1 per cup (Po = $1). Determine and illustrate the quantity demanded at Po (labeled as Qc), and the quantity supplied at Po (labeled as Qoʻ). Show Qoand Qos on the quantity...
1. Suppose gold (G) and silver (S) are substitutes for each other because both serve as hedges against inflation. Suppose also that the supplies of both are fixed in the short run (QG 75 and Qs 300) and that the demands for gold and silver are given by the following equations: P6 975-Q0.5Ps and Ps 600-Qs0.5PG a. What are the equilibrium prices of gold and silver b. What if a new discovery of gold doubles the quantity supplied to 150....
Suppose there are two firms in a market producing differentiated products. Both firms have MC=0. The demand for firm 1 and 2’s products are given by: q1(p1,p2) = 5 - 2p1 + p2 q2(p1,p2) = 5 - 2p2 + p1 a. First, suppose that the two firms compete in prices (i.e. Bertrand). Compute and graph each firm’s best response functions. What is the sign of the slope of the firms’ best-response functions? Are prices strategic substitutes or complements? b. Solve...
5. The generalized demand and supply functions for a commodity are QD-400-25 P + 0.4 M + 24 PR Qs 48 +12 P-20 P+20 F Qp quantity demanded: P price of the commodity: M- average household income: PR = Price of related goods in consumption (complements or substitutes); Qs quantity supplied; Pi Factor or input prices: F Number of suppliers a. Initially, M-S61,140 and PR- S6. Find the "reduced" demand equation. b. Find the inverse demand function (in which P...
Let one week's supply (S) and demand (D) functions for gasoline be given by p Upper D (q) equals 300 minus four-fifths q and p equals S(q) equals two-fifths q, where p is the price in dollars and q is the number of 42-gallon barrels. (A) On what interval is the quantity supplied below the equilibrium quantity?
1. If demand deceases and supply remains constant, what happens to the market equilibrium? A. Quantity and price both rise. B. neither price or quantity will change C. Quantity and price both fall. D. Quantity rises and price falls. 2. A positive statement is A. an opinion B. a value judgement. C. can be shown to be correct or incorrect. D. based upon what can be demonstrated to be true. 3. If a technology change reduces a company's production costs,...
The general demand and supply functions for good A are QD-2, 800-6P 0.5M-10PB Qs 40 4P - 8P1+6F where QD is the quantity demanded of good A, Qs is the quantity supplied of good A, P is the price of good A, M is the averaged income level of consumers, Pb is the price of a related good B, Pr is the price of an input, and F is the number of firms producing good A (a) Is good A...
2. In the market for good X, demand is QD = 6,000 – 0.8P and supply is QS = 0.4P – 300. a. Derive the inverse demand and inverse supply equations. b. What is the equilibrium price and quantity? c. Calculate the price elasticity of demand and the price elasticity of supply at the equilibrium. d. Suppose that an increase in consumer income makes consumers willing to pay $500 more per unit of good X, what is the new demand...