Comparative Statics The market for fresh-cut flower bouquets Is In equilibrium.

Question

Comparative Statics The market for fresh-cut flower bouquets Is In equilibrium. What happens P to equilibrium price and quantity If consumer incomes fall AND the mini' mum wage Is Increased? {Circle bat answer.} I } P* {rises falls is not affected Can't tell) Q* {rises falls is not affected can't tell} Total market supply and demand functions for good X are shown below: X5 = S(P, W) * 30P - W X4 = D(P.Y) = 6Y/p where P = price, X = quantity, W = labor cost, and Y = consumer total income Find the explicit function for equilibrium price. v {Quadratic formula on board} P* = P(W,Y)=_ Find P* and X* if W = $5 and $50 Y=p*=$ x*= Find elasticity n(P*. Y) and evaluate It numerically at the equilibrium values above. s good X normal or inferior? n(p* y) = X Is { normal Inferior neutral }.

Explanation / Answer

A)falls cant tell B)30P-W=6Y/P 30P^2 =6Y+WP 30p^2-wp-6y=0

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