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ECON281 Lecture Notes - Lecture 10: Kilogram, Demand Curve, Competitive Equilibrium

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taupeotter209
25 Feb 2020
School
University of Alberta
Department
Economics
Course
ECON281
Professor
Lorne Priemaza

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ECON281 Full Course Notes
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Document Summary

Explain your answer: suppose that the market for a product is perfectly competitive. The inverse demand curve is described by the equation p = 100 2qd, where p is the product"s price (in dollars per kilogram) and qd is the quantity demanded (in millions of kilograms per year). The actual price of the product is per kilogram. If you think it will change, indicate in what direction and by how much: suppose now that the supply curve shifts down in a parallel fashion (that is, its slope is unchanged). The new competitive equilibrium price is per kilogram. Write the equation for the new supply curve: given the following:

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Related Questions

1)Suppose the market demand function (expressed in dollars) for a normal product is P = 100 - 2Q and the Supply Curve is P= 100 + 2Q, where P is the price of the product and Q is the quantity demanded or supplied. Assume that the Marginal External Cost curve is MEC = 5 + 0.5Q. Here are the specific questions: 

a.In a competitive market

i.What is the equilibrium price and quantity?

ii. How much is the Consumer Surplus?

iii. How much is Producer Surplus (P.S.)?

iv. How is the total external cost (TEC)?

v.What the Total Welfare (sum of C.S. and P.S. minus TEC)?

Suppose a firm has the following demand equation: Q = 1,000 - 3,000P + 10A,

where Q = quantity demanded

P = product price (in dollars)

A = advertising expenditures (in dollars) assume for the questions below that P = $3 and A = $2,000

A. suppose the firm dropped the price to $2.50. would this be beneficial? explain. Illustrate your answer with the use of a demand schedule.

B. Suppose the firm raised the price to $4.00 while increasing the advertising expenditures by $100. Would this be beneficial? Explain and Iillustrate your answer with the demand schedule.

The inverse demand curve for product X is given by PX = 25 - 0.005Q + 0.15PY, where PX represents price in dollars per unit, Q represents the rate of sales in pounds per week, and PY represents selling price of another product Y in dollars per unit. The inverse supply curve of product X is given by PX = 5 + 0.004Q. a. Determine the equilibrium price and sales of X when PY = $10.

b. Explain whether X and Y are substitutes or complements and why.