Answered: e demand and supply functions for good…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The demand and supply functions for good x are:

Q^D = 780 – 2P_x – 6P_y + 0.02M

Q^S = 200 + 4P_x – 5P_r – 2W

Currently, P_y = 100, M = 5,000, P_r = 40, and W = 100

-What is the slope of the inverse demand curve?

-What is the equilibrium market price of good x?

-If the government imposes a price floor of $100 in the market, how much of good x is NOT sold in the market?

-If the government agrees to buy all of good x that is not sold in the market (as a result of the $100 price floor), what does this cost the government, and ultim

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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