Please provide step by step solutions and explaination 2a) suppose the demand cu

Question

Please provide step by step solutions and explaination

2a) suppose the demand curve for good x is given by x= I / 2Px what is the income of demand when I = 10 and Px = 2?

2b) Suppose the supply curve for strawberries is QS = 10+4P and the demand curve for strawberries is QD = 25P. What can we say about the market when the price is P = 6.

1) The market is in equilibrium. 2)None of the other answers are correct 3)There is an excess supply of 15. 4)There is an excess demand of 15.

2c) Suppose demand is given by Qd = 500 15P and supply is given by Qs = 5P . If the government imposes a $30 price floor the excess supply will be

2d) Farmer John owns A acres of farm and is trying to maximize profits () by looking at the price of corn (PC ) and the price of soybeans (PS) choosing how many acres of corn (C) to plant and how many acres of soybeans (S) to plant. Identify the truthfulness of the following statements:

I . The endogenous variables are C,S, and A. II) The objective function is A= C+ S.

1) I is true; II is false. 2) Both I and II are false. 2)Both I and II are true. 3) I is false: II is true

2e) Suppose the consumer faces the utility function U(C,F) = min{2C,3F}, which of the following baskets would be most preferred? Explaine why

1) C=10 , F=10 2) C=9, F=90 3) C= 9, F=90 4) C= 90, F=5

Explanation / Answer

2a) suppose the demand curve for good x is given by x= I / 2Px . When I=10 and Px=2 then the demand for x equals

x=10/(2*2)=10/4=2.5

2b) Suppose the supply curve for strawberries is QS = 10+4P and the demand curve for strawberries is QD = 25P . At price P=6, demand=25-6=19 and supply=10+4*6=34. Here excess upply=supply-demand =34-19=15

Thus when price=6, There is an excess supply of 15

2c) Suppose demand is given by Qd = 500 15P and supply is given by Qs = 5P . If the government imposes a $30 price then demand=500-15*30=50 and supply=5*30=150. Thus the excess supply at price of $ 30 will be Excess supply=150-50=100

2d) 1.The endogenous variables are C,S, and A - This statement is False, because A is not an endogeneous variable since it is fixed and has been determined outside the model.

2. The objective function is A= C+ S.- This statement is false because the objective function is profit =(Pc)*C+(Ps)*S - total cost

Thus both statements 1 & 2 are false.

2e) U(C,F) = min{2C,3F}. this is a fixed proportion utility function and the consumer will always consume C and F in the fixed proportion such that 2C=3F or C/F=1.5.

Utility from the first bundle = min{2*10,3*10}=20

Utility from the 2nd bundle = min{2*9,3*90}=18

Utility from the 3rd bundle = min{2*9,3*90}=18

Utility from the 4th bundle = min{2*90,3*5}=15

Thus the most preferred bundle is the bundle with the highest utility that is C=10.F=10

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.