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ClassOf1 Demand Supply

ClassOf1 Demand Supply

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Demand and supply.
Demand and supply.

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Published by: ClassOf1.com on Sep 10, 2009
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07/14/2011

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ClassOf1provides exert guidance for College, Graduate and High schoolhomework and liveonline  tutoring on subjects likeFinance, Marketing,Statistics,Economicsand others. Check out more solved   problems in our Solution Library.
 
Sub: Economics Topic: Micro Economics
Question:
Demand and supply.
=S71=M72:M121Qd = 22 + 0.1 Y - 10Pb + 5 PcAnd the supply of beef is given by:Qs = -400 + 500Pb - 200 Pf where Qd denotes quantity of beef demanded, Qs denotes quantity supplied,Pb denotes price, of beef, Y denotes per capita income, Pc denotes the priceof chicken, and Pf denotes the price of feed used for growing beef. Assumefurther that: Y = $10,000, Pc = $2.00, Pf = $1.00a. What is the equilibrium price and quantity of beef?b. What is the point price elasticity of demand for beef when its price is equalto $4.00, using the demand curve you derived to answer (a) above.c. If the price of chicken increases to $3.00, what happens to the demandcurve for beef? What is the equilibrium price and quantity of beef?d. Compute the cross elasticity of demand and indicate whether beef andchicken are substitutes or complements.
Solution:
Assume the demand for beef is given by
Qd = 22 + 0.1 Y – 10Pb + 5 PcAnd the supply of beef is given by:Qs = -400 + 500Pb – 200 Pf 
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 The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not forsubmitting the same inlieu of your academic submissions for grades.

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