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 the average price of the drink in $ per pack, Pc is the average wholesale price of other branded drinks in the market, Y is income in $, T is the average daily temperature in degrees, PL is the 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 a 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. (Values of Qd and Qs calculated in millions may be rounded in the table). c.Calculate the market equilibrium price and equilibrium output. d.Draw a labeled hypothetical demand and supply model clearly indicating your observations of (B) shortage and/or surplus and (C) equilibrium price and output, calculated above.
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 the average
a.When quantity is expressed as a function of price, what are NeuCola’s demand and supply
b., Will, there be a 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. (Values of Qd and Qs calculated in millions may be rounded in the table).
c.Calculate the
d.Draw a labeled hypothetical demand and supply model clearly indicating your observations of (B) shortage and/or surplus and (C) equilibrium price and output, calculated above.
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