« previous next »

Author Question: The local lemon market has the following supply and demand relationships: QD = 100 - 5p - po + 2I ... (Read 106 times)

evelyn o bentley

  • Hero Member
  • *****
  • Posts: 564
on: Jul 1, 2018
The local lemon market has the following supply and demand relationships:
 
  QD = 100 - 5p - po + 2I
   QS = 4p
  where p is the price of lemons (per pound), Q is the quantity of lemons in pounds, I is the average consumer income, and po is the price per pound of oranges. Derive the equilibrium price and quantity of lemons as functions of the price of oranges and average consumer income. Use the calculus method of comparative statics to compute the effects of income and the price of oranges on the equilibrium price and quantity of lemons.

Question 2

When majority rule voting is used to determine whether to purchase a public good,
 
  A) the efficient outcome is not assured.
  B) the median voter gets her way.
  C) the sum of the marginal benefits is ignored.
  D) All of the above.


mcomstock09

  • Sr. Member
  • ****
  • Posts: 377
Reply #1 on: Jul 1, 2018
Answer to Question 1

Find equilibrium price by setting supply and demand equal:
100 - 5p - po + 2I = 4p
Solving for p:
p = 11.11 - .11po + .22I
To find Q, plug the equilibrium price into either supply or demand:
Q = 44.44 - .44po + .89I
The comparative statics w.r.t. the price of oranges are:
p/po = -.11
Q/po = -.44
The comparative statics with respect to income are:
p/I = .22
Q/I = .89

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

evelyn o bentley

  • Hero Member
  • *****
  • Posts: 564
Reply #2 on: Jul 1, 2018
Thank you


mcomstock09

  • Sr. Member
  • ****
  • Posts: 377
Reply #3 on: Jul 1, 2018
No problemo


« previous next »
 

Did you know?

In 1864, the first barbiturate (barbituric acid) was synthesized.

Did you know?

In 2010, opiate painkllers, such as morphine, OxyContin®, and Vicodin®, were tied to almost 60% of drug overdose deaths.

Did you know?

Pregnant women usually experience a heightened sense of smell beginning late in the first trimester. Some experts call this the body's way of protecting a pregnant woman from foods that are unsafe for the fetus.

Did you know?

The modern decimal position system was the invention of the Hindus (around 800 AD), involving the placing of numerals to indicate their value (units, tens, hundreds, and so on).

Did you know?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Relationships among major invertebrate lineages Relationships among major invertebrate lineages
Chemical structures of ester and amide local anesthetics Chemical structures of ester and amide local anesthetics
Melanoma is a local contraindication for massage. Melanoma is a local contraindication for massage.
Relationships in Dyads and Triads Relationships in Dyads and Triads
The introduction of a new generation of electric and hybrid cars will reduce the demand for oil The introduction of a new generation of electric and hybrid cars will reduce the demand for oil
Blood Supply of the Liver Blood Supply of the Liver
Video: The primary factors that affect circulation - MABP, CO and SVR

For a complete list of videos, visit our video library