Anna’s demand for peaches is given by PA = 200 – 3QA, where QA is the...

Anna’s demand for peaches is given by P_A = 200 – 3Q_A, where Q_A is the quantity (kilograms) demanded at price P_A($/kilo). Basil’s demand is given by P_B = 120 – 2Q_B, where Q_B is the quantity (kilograms) demanded at price P_B ($/kilo). Each of the two has $2,000 that they can spend if they want to buy something.
1. Suppose the endowments are as follows: Anna has 110 kilograms of peaches, Basil has none. When they trade, who will sell to whom? How many kilos will be sold? At what price?
2. Suppose the endowments are as follows: Anna has no peaches, Basil has 110 kilos. When they trade, who will sell to whom? How many kilos will be sold? At what price?
3. Suppose the endowments are as follows: Anna has 60 kilograms of peaches, Basil has 50 kilos. When they trade, who will sell to whom? How many kilos will be sold? At what price?

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Expert Solution

Rahul Sunny answered 1 year ago

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