Consider the market for soybeans. The market demand is given by the equation P = 1000...

Consider the market for soybeans. The market demand is given by the equation P = 1000 – 2Q, where, P is the price and Q is the quantity. The market supply is given by the equation P = 200 + 2Q. For each of the following questions please show the steps through your final answer and not just your final answer.

1) Plot the supply and demand curves (Hint: start with P = 200, 300, 400, ... 1000 to calculate quantity supplied and demanded). What is the equilibrium price and equilibrium quantity in this market?

2) Describe the process of price adjustment in words and in a graph when the market price is below the equilibrium price.

3) Assume that a soybean supplier wishes to increase the price for soybeans from £600 to £650. Calculate the price elasticity of demand for the change in price.

4) Would you recommend the supplier to increase the price to £650?

5) A supplier of soybeans reported that quantity demanded of soybeans decreased by 12% when a major supplier of chickpeas reduced the price of chickpeas by 8%. What is the cross-price elasticity of demand? Comment on the result.

Expert Solution

Rahul Sunny answered 2 years ago

The market demand of a duopoly market is given by the equation: P = a –...

The market demand of a duopoly market is given by the equation: P = a – Q. The total costs of the two firms are TC1 = cq1, TC2 = cq2 . Solve for the Cournot-Nash Equilibrium using “double-the-slope” rule. Draw the reaction curves of the two firms. Find the output and price for monopoly and perfect competition. Label these outputs on the graph of reaction curves. Compare the outputs and prices from part a and part b.

In a hypothetical market, The demand equation is given as: P = 62 - 2Q The...

In a hypothetical market, The demand equation is given as: P = 62 - 2Q The supply equation is given as: P = 13 + 3Q. Assuming a monopoly market with Q = 7: 1) What is the monopoly market price? 2) What is the consumer surplus? 3) What is producer surplus? 4) What is the total wealth?

The demand equation for a market is given by p(q + 3) = 15 and, for...

The demand equation for a market is given by p(q + 3) = 15 and, for some constant α, the supply equation is q = αp − 1 where p is the price and q is the quantity. Given that the equilibrium price for this market is three, determine the equilibrium quantity and the value of α. Find the consumer and producer surpluses?

Demand for bowling balls in a market is given by the equation P = 20-2q. The...

Demand for bowling balls in a market is given by the equation P = 20-2q. The cost of each ball is $4. a) If firm A is the only firm in the market, how many balls will A produce? b) If firm B joins the market what is the equation for B’s reaction line? c) If both A and B are in the market, what is the equation for firm A’s reaction line? d) What is the Cournot equilibrium quantity...

Assume that the market demand curve for pesticides is given by the following equation: P(D) =...

Assume that the market demand curve for pesticides is given by the following equation: P(D) = 1000 − 2Q(D), and the market supply curve, which is equal to the aggregated marginal cost curve of all producers, is given by, P(S) = 200 + 2Q(S). Pesticide production, however, is associated with harmful side effects on both workers and nearby households and firms. The total damage to the surroundings is proportional to output according to: SMC= 250 + 2Q. a) Without any...

Consider a competitive market with demand and supply curves given by Qd(p) = 100 - P...

Consider a competitive market with demand and supply curves given by Qd(p) = 100 - P & Qs(P) = P If the government wanted to charge a constant per unit tax of T per unit, what is the maximum amount of tax revenue the government can generate?

Consider a perfectly competitive market where the market demand curve is p(q) = 1000-q. Suppose there...

Consider a perfectly competitive market where the market demand curve is p(q) = 1000-q. Suppose there are 100 firms in the market each with a cost function c(q) = q2 + 1. (a) Determine the short-run equilibrium. (b) Is each firm making a positive profit? (c) Explain what will happen in the transition into the long-run equilibrium. (d) Determine the long-run equilibrium.

Consider a market where demand is given by P = 60 - ⅓ Qd and supply...

Consider a market where demand is given by P = 60 - ⅓ Qd and supply is given by P = 20 + ⅓ Qs. Consumer Surplus is ________ amd Producer Surplus is?

#1) Consider a market with demand curve given by P = 90 - Q . The...

#1) Consider a market with demand curve given by P = 90 - Q . The total cost of production for one firm is given by TC(q) = (q2/2)+10 . The marginal cost of production is MC = q . a) If the market is perfectly competitive, find the supply curve for one firm. Explain. b) If the market price was $10, how many perfectly competitive firms are in the industry if they are identical? Explain. c) Find an expression...

Consider a market where demand is given by P = 50 - Qd and supply is...

Consider a market where demand is given by P = 50 - Qd and supply is given by P = 10 + Qs. After a tax of t = 4 is placed on producers Producer surplus is between 180 and 200 Producer surplus is between 220 and 240 Producer surplus is between 160 and 180 Producer surplus is between 200 and 220

Question