Author Question: Using the supply and demand equations for wheat, solve for the equilibrium price and quantity as ... (Read 68 times)

2125004343 · **on:** Jul 1, 2018

Using the supply and demand equations for wheat, solve for the equilibrium price and quantity as functions of I and r.

What will be an ideal response?

Question 2

Government actions that create monopolies

A) spur product innovation by the monopoly.
B) create deadweight loss.
C) result in lower average costs of production.
D) ensure that firms price at marginal cost.

l.stuut · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

Setting QS = QD we get:
20r + 100p = 4000 - 100p + 10I
Solving for equilibrium price:
p = 20 + .05I - .1r
Plug this into either supply or demand to find equilibrium quantity
Q = 2000 + 5I + 10r

Answer to Question 2

B