Answered: Let PX denote the price of product X…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Let PX denote the price of product X (and likewise for other subscripts); M, the consumers’ income, and AX, the amount invested in advertising for product X (and likewise for other subscripts). If PY = 6; AZ = 50000; PW = 0.5, when graphing the demand function QDX = 3500 – 250PX – 280PY – 0.02AZ, what is the intercept of the Q-axis? Select one below. (A) 566.7667. (B)-13. (C) 820. (D)1050. 2. Imagine the market for Good X has a demand function of QDX = 40 – PX and a supply function of QSX = 2PX – 20. Suppose the current price of Good X (PX) is 30. Calculate consumer surplus (CS). CS = ________ 3. Imagine the tea market has a demand function of QDX = 10 – 2PX and a supply function of QSX = PX − 2, where PX is the price of the tea. Assuming the price is at equilibrium, calculate the equilibrium price (P*). P* = _________ 4. MacGuffins have a demand function of QD = 70 – P and a supply function of QS = 2P + 10. Determine the price at equilibrium PS = _______ 5. Imagine the market for Good X has a demand function of QDX = 100 – 2PX – 4PY + .05M + 0.1AX, and a supply function of QSX = 4PX – 10, where PX is the price of Good X, PY is the price of Good Y, M is the average consumer income and AX is the amount spent to advertise Good X. If PY is $3, M is $24,000, AX is $500, find the equilibrium price of Good X. P* = __________ 6. MacGuffins have a demand function of QD = 70 – P and a supply function of QS = 2P + 10. Determine the supply quantity when the price is $40. 7. Imagine the market for Good X has a demand function of QDX = 100 – 2PX – 4PY + 0.05M + 0.1AX and a supply function of QSX = 4PX – 10, where PX is the price of Good X, PY is the price of Good Y, M is the average consumer income and AX is the amount spent to advertise Good X. If the price of Good Y is $5, M is $5000 and AX is $10,000, find the equilibrium price of Good X. 8. Suppose the market for X has a demand function of QDX = 1000 – PX − 2PY + 0.2M and a supply function of QSX = 4PX – 500, where PX is the price of Good X, PY is the price of Good Y, and M is the average consumer income. If PY is $50, and M = $1,000, find the equilibrium price of Good X. 9. Imagine the market for Good X has a demand function of Qdx = 200 – 2Px – Py + .1M and a supply function of Qsx = 2Px – 2Pw, where Px is the price of Good X, Py is the price of Good Y, and M is the average consumer income. Pw is the price of Good W, which is an input to the production of Good X. If Py = 10, Pw = 50, M = $2700, what's the price of X in equilibrium? 10. MacGuffins have a demand function of QD = 70 – P and a supply function of QS = 2P + 10. Determine the price for a supplied quantity is 0. 11. Imagine the market for Good X has a demand function of QDX = 100 – 2PX – 4PY + .05M + .1AX and a supply function of QSX = 4PX – 10, where PX is the price of Good X, PY is the price of Good Y, M is the average consumer income and AX is the amount spent to advertise Good X. If PY is $3, M is $24,000, AX is $500, find the equilibrium quantity of Good X. 12. Imagine the market for a phone card has a demand function of QDX = 38 – 2PX and a supply function of QSX = 4PX - 10, where PX is the price of the phone card. If PX is 10, calculate the producer surplus (PS).

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