a b c 2. Assume equations 1 and 2 below were estimated from the data gathered that will representthe demand and supply functions respectively of an individual buyer and seller respectivelyfor product X.Eq. 1Eq. 2Qdx = 65,000 – 11.25Px + 15P, – 3.751 + 7.5AQsx = 7,500 + 14.25Px – 15P, – 3.75Cwhere Px - price of product X; Py - price of product Y; Iadvertising expenditure; Pz- price of product Z; and C- cost of production.average consumer's income; A Use the following additional information: the price of a related product, Y, is P41.25; theaverage consumer's income is P12,000; advertising expenditure is P2,500; the price of proluctZ is P90; and the cost of production is P1,200. There are 30 identical buyers and 50 identicalsellers in the market for product X.A. Is product X a normal or an inferior product? Justify.B. How are product X and product Y related for the buyer? Explain.C. On the part of the seller, what kind product Z is?D. Using the market demand function, what is Px that will make all the buyers stoppurchasing this product? Round-up to two decimals.E. What is the interpretation of the parameter a of the market demand function?F. What is the interpretation of the parameter b of the market demand function?G. What is the interpretation of the parameter d of the market supply function?H. What is the market price of product X? Round-up to two decimals.What is the equilibrium quantity in this market?J. What is the price range that will result to a surplus in the market?K. What is the price range that will result to a shortage in the market?I.If the government will intervene in this market and imposes that the minimum price will be20% more than the market price,L. How much would be the quantity demanded? Round-up to two decimals.M. How much would be the quantity supplied? Round-up to two decimals.N. From L and M, what is the condition in the market? Explain conciscly.If the new supply equation will be Qs'x = 26,250 + 712.50P'x,O. What would be the new equilibrium price (round-up to two decimals)?P. How many of this product will be bought and sold at this new market price? Round-upto two decimals.Q. What is the specific reason for this change in supply?

The sensitivity of the quantity desired for a specific good to a change in the actual income of…

for product X. Eq. 1 Eq. 2 Qdx = 65,000 – 11.25P; + 15P, – 3.75/ +7.5A Qsx = 7,500 + 14.25PX – 15P, – 3.75C where Px - price of product X; Py – price of product Y; I – average consumer's income; A advertising expenditure; Pz – price of product Z; and C – cost of production.

for product X. Eq. 1 Eq. 2 Qdx = 65,000 – 11.25P; + 15P, – 3.75/ +7.5A Qsx = 7,500 + 14.25PX – 15P, – 3.75C where Px - price of product X; Py – price of product Y; I – average consumer's income; A advertising expenditure; Pz – price of product Z; and C – cost of production.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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