Part 2: Storage Equilibrium Assume that the market supply curve for potatoes is Qs1 = 12 + 0.5P, and that there are two marketing periods for the crop. In the first marketing period the demand curve is: QD1 = 24 – P1, in the second period it is: QD2= 18 - P2. Draw a graph of the markets in the two periods showing prices and quantities if it costs nothing to store potatoes. Be sure to label all the relevant features on your graph. [Insert an image of your graph here] Show the prices and quantities in each period if it costs $5 per cwt. to store potatoes for delivery in the second marketing period. Again, be sure to label all relevant features on your graph (s). [Insert an image of your graph here] By comparing the results for 5 and 6 above explain how the cost of storage affects prices and quantities in each period.

In any region or state the equilibrium is said to occur when demand is equal to its supply. Storage…

Answered: Assume that the market supply curve for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Part 2: Storage Equilibrium

Assume that the market supply curve for potatoes is Qs₁ = 12 + 0.5P, and that there are two marketing periods for the crop. In the first marketing period the demand curve is: Q_D1 = 24 – P₁, in the second period it is: Q_D2= 18 - P₂.

Draw a graph of the markets in the two periods showing prices and quantities if it costs nothing to store potatoes. Be sure to label all the relevant features on your graph.

[Insert an image of your graph here]

Show the prices and quantities in each period if it costs $5 per cwt. to store potatoes for delivery in the second marketing period. Again, be sure to label all relevant features on your graph (s).

[Insert an image of your graph here]

By comparing the results for 5 and 6 above explain how the cost of storage affects prices and quantities in each period.

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