Problem 1: A furry trend There is a new trend among youngsters in Shanghai: having a ferret. The ferrets market is perfectly competitive with supply function P = Q, where Q is measured in percentage of the Shanghainese young population. Each Shanghainese youngster receives an allowance from the parents for frivolous stuff which is equal to r, where r is the percentile of the youngster's parents in the wealth distribution of all parents. Given the current trend, every youngster is willing to spend half of the allowance on buying one ferret (nobody ever buys more than one). a) The demand function is P = (100-Q)/2: explain why in very few words. b) Find the competitive equilibrium price and percentage of youngsters who will buy a ferret.

Problem 1: A furry trend There is a new trend among youngsters in Shanghai: having a ferret. The ferrets market is perfectly competitive with supply function P = Q, where Q is measured in percentage of the Shanghainese young population. Each Shanghainese youngster receives an allowance from the parents for frivolous stuff which is equal to r, where r is the percentile of the youngster's parents in the wealth distribution of all parents. Given the current trend, every youngster is willing to spend half of the allowance on buying one ferret (nobody ever buys more than one). a) The demand function is P = (100-Q)/2: explain why in very few words. b) Find the competitive equilibrium price and percentage of youngsters who will buy a ferret.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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