(A) Consider the market for Gym clothes, here's the supply function QS = 11 + 3Pg + OPo and the demand function: QD = -4Pg + 4Po.; Where Pg and Po are the prices of Gym Clothes and Office clothes, respectively. If the price of office clothes is $6, what is the market price of Gym clothes? (B) Calculate the Willingness to Pay and the Economic Cost (C). Now, suppose the regulated price of Gym clothes is fixed at $6, ceteris paribus, will there be a surplus or shortage?
(A) Consider the market for Gym clothes, here's the supply function QS = 11 + 3Pg + OPo and the demand function: QD = -4Pg + 4Po.; Where Pg and Po are the prices of Gym Clothes and Office clothes, respectively. If the price of office clothes is $6, what is the market price of Gym clothes? (B) Calculate the Willingness to Pay and the Economic Cost (C). Now, suppose the regulated price of Gym clothes is fixed at $6, ceteris paribus, will there be a surplus or shortage?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![(A) Consider the market for Gym clothes, here's the supply function QS = 11 +3Pg + OPo and the demand
function: QD = -4Pg + 4Po.; Where Pg and Po are the prices of Gym Clothes and Office clothes,
respectively.
If the price of office clothes is $6, what is the market price of Gym clothes?
(B) Calculate the Willingness to Pay and the Economic Cost
(C). Now, suppose the regulated price of Gym clothes is fixed at $6, ceteris paribus, will there be a surplus
or shortage?
(D) Calculate the amount of surplus/shortage.
(E) Suppose that the market for Gym clothes is not regulated anymore. If the price of Office clothes is
increased from $6 to $10, what will be the new market price of Gym clothes?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc29fe696-6a6f-4934-a05a-067082764971%2F3602f272-48c0-49ac-8f19-440fd1d248d9%2Fai4gnv4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(A) Consider the market for Gym clothes, here's the supply function QS = 11 +3Pg + OPo and the demand
function: QD = -4Pg + 4Po.; Where Pg and Po are the prices of Gym Clothes and Office clothes,
respectively.
If the price of office clothes is $6, what is the market price of Gym clothes?
(B) Calculate the Willingness to Pay and the Economic Cost
(C). Now, suppose the regulated price of Gym clothes is fixed at $6, ceteris paribus, will there be a surplus
or shortage?
(D) Calculate the amount of surplus/shortage.
(E) Suppose that the market for Gym clothes is not regulated anymore. If the price of Office clothes is
increased from $6 to $10, what will be the new market price of Gym clothes?
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