1) The first equation is the demand curve which gives the market demand which varies with the prevailing price of the good. The quantity demanded by the consumers varies negatively with price, satisfying the law of demand. The lower the price, the higher is the demand of the good.
The second, being the supply curve gives the quantity supplied given the price of the good. As expected, the producers supply more to higher price and hence there is a positive relationship between Q and P.
2) At equilibrium, Demand = Supply. Hence,
Replacing this value of P in either the demand or supply curve gives us,
3)
As 'a' increases, quantity demanded at all prices increase, resulting in higher equilibrium price and quantity.
As 'b' increases, the absolute slope of the demand curve increases, the demand curve becomes steeper. Consumers demand lower quantities than before for lower prices which results in a decline of the equilibrium price and quantity.
As 'c' increases, quantity supplied is less at all prices which results in a scarcity, driving the equilibrium price up but the equilibrium quantity down.
As 'd' increases, slope of the supply curve decreases, higher quantity is supplied than before for higher prices. Supply curve is This leads to a fall in equilibrium price but a rise in equilibrium quantity.
4)
For every unit change in 'a', equilibrium price will change by 1/5 and the equilibrium quantity by 3/5. The interpretation will be the same for the rest.
5) Label the diagrams according to the first diagram.
2. Points = 26. Consider Market Model: Demand: Supply: Q=a-bP Q=-c+dP (a, b>0) (c,d > 0) 1) Discuss in words the...
Consider Market Model: Demand: Supply: Q= a - bP Q=-c+dP (a, b > 0) (c, d > 0) * 1) Discuss in words the meaning of each equation in the model (3 points); 2) Find the equilibrium levels of P* and Q* (3 points); 3) Draw qualitative conclusions about changes in P* and Q* when each of the parameters change. (Qualitative conclusion shows the direction of change.) Explain economic meaning of these changes. (Total 6 points: 3 points for P*;...
2. Consider Market Model (а, b > 0) (c, d >0) Demand: Q%3Dа — БР Q%3D-с + dP Supply: 1) Discuss in words the meaning of each equation in the model 2) Find the equilibrium levels of P and Q* 3) Draw gualitative conclusions about changes in P* and Q' when each of the parameters change. (Qualitative conclusion shows the direction of change.) Explain economic meaning of these changes 4) If a 10, c 5, b = 2; d =...
it is all one question, please answer them all! thank you! 2. Points = 26. Consider Market Model: Demand: Supply: Q = a -6P Q=-c+dP (a, b>0) (c,d > 0) 1) Discuss in words the meaning of each equation in the model (3 points); 2) Find the equilibrium levels of P and Q (3 points); 3) Draw qualitative conclusions about changes in P and Q' when each of the parameters change. (Qualitative conclusion shows the direction of change.) Explain economic...
USU.US CUJL 1.ULTIUZULUV.CUIT 1. Points = 18 Consider National-Income Model: National Income: Consumption: Investment: Government Sector: Taxes: Y=C+I+G C = a + b (Y-T) I=k+rY G=Go T=f+jY 0<b<1 0<r<1 a> 0 in mln dollars; k>0 in mln dollars; Go >O in mln dollars f> 0 in mln dollars; 0<j<1 1) Discuss in words the meaning of each of the equations in the model (3 points); 2) Find the equilibrium level of GDP (Y) in reduced form (3 points); 3) If...
please, i need answeer for all 4 questions Consider National-Income Model: National Income: Consumption: Investment: Government Sector: Taxes: Y=C+I+G C = a + b (Y-T) I=k+rY G=Go T=f+jY 0<b<1 0<x<1 a> 0 in mln dollars; k>0 in mln dollars; Go > in mln dollars f> 0 in mln dollars; 0<j<1 1) Discuss in words the meaning of each of the equations in the model (3 points); 2) Find the equilibrium level of GDP (Y) in reduced form (3 points); 3)...
1. Points = 18. Consider National-Income Model: National Income: Consumption: Investment: Government Sector: Taxes: Y=C+I+G C = a + b (Y-T) I=k+rY G=Go T=f+jY 0<b<1 (<r<1 a> 0 in mln dollars; k>0 in mln dollars; Go >O in mln dollars p> 0 in mln dollars; 0<j<1 1) Discuss in words the meaning of each of the equations in the model (3 points); 2) Find the equilibrium level of GDP (Y) in reduced form (3 points); 3) If we know the...
Consider National-Income Model: National Income: Consumption: Investment: Government Sector: Taxes: Y=C+I+G C = a + b (Y-T) I=k+rY G=GO T=f+jY <b<1 (<r<1 a>0 in mln dollars; k>O in mln dollars; Go >O in mln dollars fo in mln dollars; 0<j<1 1) Discuss in words the meaning of each of the equations in the model (3 points); 2) Find the equilibrium level of GDP (Y*) in reduced form (3 points); 3) If we know the parameters of the system, find the...
1 through 6 is basicly one question which is divided up USU.US CUJL 1.ULTIUZULUVV.CUIT 1. Points = 18. Consider National-Income Model: National Income: Consumption: Investment: Government Sector: Taxes: Y=C+I+G C = a + b (Y-T) I=k+rY G=Go T=f+j Y 0<b<1 0<r<1 a> 0 in mln dollars; k>0 in mln dollars; Go >O in mln dollars f> 0 in mln dollars; 0<j<1 1) Discuss in words the meaning of each of the equations in the model (3 points); 2) Find the...
3. Coumot Competibion (26 points) Consider a Cournot model. The market demand is p-130-q-q Firm l's marginal cost is 10, and fim 2's marginal cost is also 10. There are no fixed costs. A. (10points) Derive the best response function for each firm B. (6 points) Find the Nash Equilibrium. T. (5 points) Find the equilibrium market price and each firm's equilibrium profit. D. (5 points) Find the consumer surplus at the market equilibrium.
1. [25 points] A supply and demand model is described by the following equations: Demand: P a bQd Supply: P =-c + da Equilibrium: Qd Qs Rewrite the equations of the model in the case where a subsidy of s dollars per unit is placed on production of the good. This means that for every unit that firms sell, the government gives them s dollars. [Hint: if P is the price paid by consumers, what is the price received by...