Need the answer to number 5. 1. The following two linear functions represent a m

Question

Need the answer to number 5.

1. The following two linear functions represent a market (thus one is a supply function, the other a demand function). Circle the answer closest to being correct. Approximately what will suppliers willingly supply if the government controls the market price to be $3.00 (You must first find the market equilibrium price and quantity in order to see how the $3.00 relates to them)?

Q = 100 – 4.6P and Q = 75 + 6.2P

2. There has been a change in the market (represented in 1 above). The change is represented by the following two equations. Circle the one correct conclusion that describes the market change.

                                    Q = 90 + 6.2P   and Q = 110 – 4.6P

3. Circle the function on the answer sheet that represents the marginal revenue (MR) function for this demand function: Q = 75 – 7P

4. Circle the quantity that maximizes total revenue (TR) for the marginal revenue (MR) function selected in number three (3).

5. If supply decreases but demand remains the same, we can conclude that the new equilibrium:

a. Price must fall but market quantity is indeterminate.

   b. Quantity must increase but market price is indeterminate.

   c. Price must increase but market quantity is indeterminate.

   d. Quantity must decrease but market p rice is indeterminate.

   e. Price must increase and Quantity must increase.

     f.   Price must increase and quantity must decrease.

Explanation / Answer

With a decrease in the supply and demand remaining the same the new equilibrium will be at a higher price and lower quantity.

The answer is "F", it will shift the supply curve at a higher price and lower quantity leaving the demand as it is.  

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