Q s = 2,000 - 160P s + 8I +140P a, where Q s is the demand for steel (in pounds)

Question

Qs = 2,000 - 160Ps + 8I +140Pa,

where Qs is the demand for steel (in pounds) peryear, Ps is the price of steel in cents per pound, I isincome per capita in dollars, and Pa is the price ofaluminum in cents per pound. Currently the price of steel is160¢ per pound, income per capita is $20,000, and the price ofaluminum is 300¢ per pound.

a.        How much steel will be demanded at the current prices andincome?

1. A steel industry trade groupestimates that the demand for steel in a particular market is givenas

Qs = 2,000 - 160Ps + 8I +140Pa,

where Qs is the demand for steel (in pounds) peryear, Ps is the price of steel in cents per pound, I isincome per capita in dollars, and Pa is the price ofaluminum in cents per pound. Currently the price of steel is160¢ per pound, income per capita is $20,000, and the price ofaluminum is 300¢ per pound.

a.        How much steel will be demanded at the current prices andincome?

Explanation / Answer

Qs = 2,000 - 160Ps + 8I +140Pa Ps=$1.60 I = $20,000 Pa= $3.00 Qs = 2,000 -160(1.60) + 8(20,000) + 140(3.00)      = 2,000 - 256 + 160,000 + 420      = 162,164 Please rate Ps=$1.60 I = $20,000 Pa= $3.00 Qs = 2,000 -160(1.60) + 8(20,000) + 140(3.00)      = 2,000 - 256 + 160,000 + 420      = 162,164 Please rate      = 162,164 Please rate

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