1) Given the following plan of supply and demand for chewing gum Price Quantity
ID: 3098661 • Letter: 1
Question
1) Given the following plan of supply and demand for chewing gumPrice Quantity Demanded Quantity offered
(Cents / pack) (Million packets per week) (Million packets per week)
.20 170 50
.30 150 70
.40 130 80
.50 110 100
.60 90 120
.70 70 140
.80 50 160
Assuming a linear relationship between price and quantity
a) Establish the role of demand
b) Establish the role of supply
c) Determine the price and the equilibrium quantity
d) Plot the functions
2) Given the following demand function QD = 68 to 002 P and the following supply function QS = -64 + 0.004 P
a) Find the price and the equilibrium quantity
b) Evaluate both functions at the following prices
$ 0,
$ 5,
$ 10
$ 25,
$ 30 and $ 35
3) Suppose the weekly supply function for a pound of coffee at a local sales is given by
Qs = 50P
a) How many pounds of coffee should be offered if the price is $ 8.00/lb, $ 20.00/lb?
b) At what price will offer 300 lbs., 200 lb?
4) Suppose the demand function weekly cereal boxes is given by
QD = 38 - 1.27P
a) How many boxes are purchased when the price is $ 1.10, $ 2.15, $ 3.20,?
b) At what price would claim 100 or 300 boxes?
5) Develop the demand function for a well if they require a $ 10 200 units and 400 units at $ 5.00.
6) Develop the supply function for a well if they offer 300 units at $ 10 and 600 units at $ 20.
7) Find the price and quantity equilibrium for supply and demand functions developed in problems 5 and 6.
8) Using the same function but this time leaving in 20 years fixed, and varying interest rates by 20%, 15%, 10% and 5%, what is the present value of $ 150.000?
9) If the present value amount is $ 200,%, what is the final value of these at an interest rate of 8% for 15 years?
10) If the final value of an amount was $ 300,000, and its initial value was $ 10,000, what is the value of the factor (1 + r) n?
11) If a company shows the following flow of profits or losses for the next 5 years
(1) $ 2.000 (2) $ 3.000 (3) ($ 2.000) (4) $ 1000 (5) ($ 500)
what is the present value of these at a discount rate of 8%?
Explanation / Answer
Ans. 1>a> Law of demand holds, as price increases quantity demanded decreases. b> Law of supply holds, as price increases quantity supplied decreases. c> Plot the following points over the graph or make a linear equation with the help of available data, and then find the point where the demand function & supply function cuts each other. Then the coordinate of the point represents the equillibium quantity & price respectively. 2> the demand function Qd=68+0.002*p the supply function Qs=-64+.004*p Now at equillibium, Qd=Qs so 68+0.002p= -64+.004p 68+64=(.004-.002)p p=66,000 so Qd=Qs=200 [Ans.]
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