« previous next »

Author Question: The local lemon market has the following supply and demand relationships: QD = 100 - 5p - po + 2I ... (Read 96 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?

To prove that stomach ulcers were caused by bacteria and not by stress, a researcher consumed an entire laboratory beaker full of bacterial culture. After this, he did indeed develop stomach ulcers, and won the Nobel Prize for his discovery.

Did you know?

If all the neurons in the human body were lined up, they would stretch more than 600 miles.

Did you know?

For about 100 years, scientists thought that peptic ulcers were caused by stress, spicy food, and alcohol. Later, researchers added stomach acid to the list of causes and began treating ulcers with antacids. Now it is known that peptic ulcers are predominantly caused by Helicobacter pylori, a spiral-shaped bacterium that normally exist in the stomach.

Did you know?

Blastomycosis is often misdiagnosed, resulting in tragic outcomes. It is caused by a fungus living in moist soil, in wooded areas of the United States and Canada. If inhaled, the fungus can cause mild breathing problems that may worsen and cause serious illness and even death.

Did you know?

Essential fatty acids have been shown to be effective against ulcers, asthma, dental cavities, and skin disorders such as acne.

Water vapor is supplied to the atmosphere by local evaporation or horizontal transport (advection). Water vapor is supplied to the atmosphere by local evaporation or horizontal transport (advection).
Arteriosclerosis is a local contraindication for massage of the lateral neck. Arteriosclerosis is a local contraindication for massage of the lateral neck.
The growth in demand for energy use is met by burning fossil fuels The growth in demand for energy use is met by burning fossil fuels
The demand for cheap coal to generate electrical power is rising The demand for cheap coal to generate electrical power is rising
Managing Supply Chain and Operations: An Integrative Approach, 2nd Edition Managing Supply Chain and Operations: An Integrative Approach, 2nd Edition
Video: Endocytosis -Types and Phagocytosis

For a complete list of videos, visit our video library