Given the demand function for Pepsi Cola as Qd= 60-2Pc + 0.01M +4Pr where Qd = Demand for Pepsi Cola. Pc = Price of Pepsi Cola. Pf = Price of Fanta and M= Income, answer the following questions: Is Pepsi Cola a normal or inferior good and why?Is Fanta a substitute or complement to Pepsi Cola and why?Derive an equation for the demand function for Pepsi Cola if M=18000SOLVE FROM question 4 to 10If the supply function for Pepsi Cola is given by Qs = -200 + 6Pc, Calculate the equilibrium price and quantity for Pepsi ColaFind the Consumer and Producer Surpluses for Pepsi ColaCalculate the price elasticity of supply for Pepsi Cola and explain your answerAll Giffen goods are inferior True or falseIf Government decides to fix the price of Pepsi Cola at 120, what will be excess demand or supply due to this?suppose the income increases by 1000 what will happen to the demand for Pepsi ColaFind the new equilibrium price and quantity for Pepsi Cola associated with the increase in income

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Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter5: Income And Substitution Effects

Section: Chapter Questions

Problem 5.12P

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Given the demand function for Pepsi Cola as Qd= 60-2Pc + 0.01M +4Pr where Qd = Demand for Pepsi Cola. Pc = Price of Pepsi Cola. Pf = Price of Fanta and M= Income, answer the following questions:

Is Pepsi Cola a normal or inferior good and why?
Is Fanta a substitute or complement to Pepsi Cola and why?
Derive an equation for the demand function for Pepsi Cola if M=18000

SOLVE FROM question 4 to 10

If the supply function for Pepsi Cola is given by Qs = -200 + 6Pc, Calculate the equilibrium price and quantity for Pepsi Cola
Find the Consumer and Producer Surpluses for Pepsi Cola
Calculate the price elasticity of supply for Pepsi Cola and explain your answer
All Giffen goods are inferior True or false
If Government decides to fix the price of Pepsi Cola at 120, what will be excess demand or supply due to this?
suppose the income increases by 1000 what will happen to the demand for Pepsi Cola
Find the new equilibrium price and quantity for Pepsi Cola associated with the increase in income

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

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