diflerent factors that might influence the demand for and supply of organic appl
ID: 1143964 • Letter: D
Question
diflerent factors that might influence the demand for and supply of organic apples Th t demand sot orgaic aples is estimated as Qp.arples 100 10Ppls6Poranges + tes is the quantity demanded of organic apples, Papples is the average price of oranic apples apples s the aver price of organic oranges, is the average income of people. Pric the price of e. and His an index of news items about health benefits of organic apples (higher value means ewer tavable stories, and vice vers). We found the average values of these variables to be Rs 10. 1-3. Puice -Rs 10. H- 3 e market supply for organic apples is estimated as Sapples = 764 8Papples-0.5P fertilizer-3T + 2R es is the quantity supplied of organic apples. Papples is the average price of organic apples is the price of fertilizer. Tis government excise tax rate on organic apples, and R is an index « nd innovation in organic apple farming (a higher value means progress through research an 1). We found the average values of these variables to be: Piertülzer - Ks 60. T 3. R 3 What is the equilibrium price and quantity in the market for organic apples? (5 points)Explanation / Answer
Replacing the given values in the equation:
Qd = 100 - 10Pa +60 + 45 + 30 -12 = 223 - 10Pa
Qs = 76 + 8Pa -30 -9 + 6 = 43 + 8Pa
At equilibrium Qd = Qs
18Pa = 180
Pa = 10 and Q = 123
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