Part I. Suppose that from the data gathered, the individual demand and supply functions for product Xare given by Eq. 1 and Eq. 2 respectively were derived,Qdx = 3.7 0.74Px + 0.00091 + 0.28PyQsx = -119.33 + 69.38PX - 13.88CEq. 1Eq. 2where Px - price of product X; I - weekly income; Py - price of product Y; and C - cost of production.Use the following additional information: the weekly income is P4,485; the price of a related product, Y,is P37.45; the cost of production is P19.50; there are 500 buyers and 16 sellers in the market for productX.1. Derive the market demand function.2. From (1), what is Px that will make all the buyers stop purchasing this product? Round-up to twodecimals.units of this product; beyond this amount,3. The consumers will want to consume a maximum ofthey will experience lesser satisfaction.4. Derive the market supply function.5. From (4), sellers will not sell anything if Px is equal to6. What is the equilibrium price in this market? Round-up to six decimals.7. What is the equilibrium quantity? Use the value of Pe from (6).8. Assume the price of product X is P22.72, is there an excess demand or supply? How much?9. Assume the price of product X is P26.13, is there an excess demand or supply? How much?10. If the price of X increases from P15 to P17, what is the coefficient of sensitivity of all the buyers giventhis price increase? Round-up to two decimals. Identify the degree and interpret this coefficient.11. Suppose the average income of the buyers decreases to P4,200 and the price of X is P20. Betweenthese two income values, if income will change by 1%, how much will the demand for product X ofthe buyers change? Round-up to two decimals. What will be the classification of product X?12. Between the prices P8.50 and P9.50, are the sellers relatively sensitive or insensitive?

Qd$ = 3.7 - 0.74P$ + 0.0009I + 0.28P% Qs$ = -119.33 + 69.38 P$ - 13.88CWeekly income = P4485Price of…

Part I. Suppose that from the data gathered, the individual demand and supply functions for product X are given by Eq. 1 and Eq. 2 respectively were derived, Qdx = 3.7 0.74Px + 0.00091 + 0.28Py Qsx = -119.33 + 69.38Px − 13.88C Eq. 1 Eq. 2 where Px - price of product X; I - weekly income; Py- price of product Y; and C cost of production.

Part I. Suppose that from the data gathered, the individual demand and supply functions for product X are given by Eq. 1 and Eq. 2 respectively were derived, Qdx = 3.7 0.74Px + 0.00091 + 0.28Py Qsx = -119.33 + 69.38Px − 13.88C Eq. 1 Eq. 2 where Px - price of product X; I - weekly income; Py- price of product Y; and C cost of production.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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Question

Part I. Suppose that from the data gathered, the individual demand and supply functions for product X
are given by Eq. 1 and Eq. 2 respectively were derived,
Qdx = 3.7 0.74Px + 0.00091 + 0.28Py
Qsx = -119.33 + 69.38PX - 13.88C
Eq. 1
Eq. 2
where Px - price of product X; I - weekly income; Py - price of product Y; and C - cost of production.
Use the following additional information: the weekly income is P4,485; the price of a related product, Y,
is P37.45; the cost of production is P19.50; there are 500 buyers and 16 sellers in the market for product
X.
1. Derive the market demand function.
2. From (1), what is Px that will make all the buyers stop purchasing this product? Round-up to two
decimals.
units of this product; beyond this amount,
3. The consumers will want to consume a maximum of
they will experience lesser satisfaction.
4. Derive the market supply function.
5. From (4), sellers will not sell anything if Px is equal to
6. What is the equilibrium price in this market? Round-up to six decimals.
7. What is the equilibrium quantity? Use the value of Pe from (6).
8. Assume the price of product X is P22.72, is there an excess demand or supply? How much?
9. Assume the price of product X is P26.13, is there an excess demand or supply? How much?
10. If the price of X increases from P15 to P17, what is the coefficient of sensitivity of all the buyers given
this price increase? Round-up to two decimals. Identify the degree and interpret this coefficient.
11. Suppose the average income of the buyers decreases to P4,200 and the price of X is P20. Between
these two income values, if income will change by 1%, how much will the demand for product X of
the buyers change? Round-up to two decimals. What will be the classification of product X?
12. Between the prices P8.50 and P9.50, are the sellers relatively sensitive or insensitive?

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