Answered: Given the demand function for beef is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Given the demand function for beef is Qx= 300-10

0Px+60Pp+0.01Y, where Qx is the tons of beef demanded in your city per week, Px is the price per pound of beef, Pp is the price per pound

of pork, and Y is the average household income in the city. The supply of beef function is Qx=200+150P-30C, where Qx is the tons of beef supplied

in your city per week, Px is the price of beef per pound, and C is the cost of feed for cows. Assume initially, the price of pork (Pp) is $3per pound, Y=$50,000, and C=$5.

a. Find the demand function Qd the given price of pork (Pp) and income (Y) and find the supply function at the given cost of feed per pound (C).

b. What is the equilibrium price per pound and quantity demanded of beef?

c. What is the price elasticity of demand for beef? Is

the demand for beef price elastic

d. As the manager of the beef business, should increase or decrease the price of beef if the objective is to increase your operating revenue?

e. What is the cross-price elasticity of demand for beef as a result of a given percentage change in

the price of pork? Is the demand for beef cross-price elastic, or inelastic? Are beef and pork substitutes or complements? How do you know?

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