Industry demand and supply for a new soft drink NeuCola is as follows: Qd = 460,000 – 100,000 P + 22,500 Pc + 21 Y + 2,000 T Qs = 40,000 + 80,000 P – 60,000 PL – 5,000 Pk Where P is average price of the drink in $ per pack, Pc is average wholesale price other branded drinks in the market, Y is income in $, T is average daily temperature in degrees, PL is average wage of labor in $ per hour and Pk is the average cost of capital in $. a. When quantity is expressed as a function of price, what are NeuCola’s demand and supply curves if Pc = $8, Y=$10,000 billion, T=75 degrees, PL=$10 and Pk=$12. b. Will there be surplus or shortage of NeuCola when P = $5, $7 and $9? Use a table to show values of quantity demanded and quantity supplied at each level of price.
Industry
Qd = 460,000 – 100,000 P + 22,500 Pc + 21 Y + 2,000 T
Qs = 40,000 + 80,000 P – 60,000 PL – 5,000 Pk
Where P is average
a. When quantity is expressed as a function of price, what are NeuCola’s demand and supply
b. Will there be surplus or shortage of NeuCola when P = $5, $7 and $9? Use a table to show values of quantity demanded and quantity supplied at each level of price.
Step by step
Solved in 2 steps with 2 images
