What is the equilibrium market price the store will charge

Assignment Help Business Economics

Reference no: EM131009958

A grocery store in a small town has a supply curve for oranges that is given by the equation P=1/10Q+1. The store faces a weekly demand curve for oranges given by P=16-2/5Q where price is measured in dollars and quantity is measure in bags of oranges.

a) Plot the supply and demand curves on a scale diagram.

b) What is the equilibrium market price the store will charge and how many bags will consumers buy? What is the store’s revenue?

c) What is the Total Market Value of this market? How much is the consumer surplus?

d) Suppose the government added a tax of $1 per bag of oranges. How many bags will consumers now buy and how much will they pay?

Reference no: EM131009958

Questions Cloud

Drastic cost reductions : In December 1998, after a year in which Asian demand for B.C. lumber had fallen dramatically, an article in The Globe and Mail had the following headline: “Drastic Cost Reductions Needed to Save 13 B.C. Sawmills”. Does this headline suggest that B.C...

Draw supply and demand diagram for the corn market : Consider the perfectly competitive Corn industry. It is initially in long run equilibrium at quantity Q0 and price P0. Draw a supply and demand diagram for the Corn market showing this equilibrium. Draw a diagram for a typical firm in its initial lon..

What are the economic profits for the greener way : The revenues and costs of The Greener Way, a lawn care business wholly owned by Mr. Albert Johnston are listed below. Lawn Mowing $63,000 Aeration $2,000 Labour Cost $30,000 Vehicle Costs $15,000 Lawnmower Maintenance $5,000 Debt-Service Costs $13,00..

What is the equilibrium market price the store will charge : A grocery store in a small town has a supply curve for oranges that is given by the equation P=1/10Q+1. The store faces a weekly demand curve for oranges given by P=16-2/5Q where price is measured in dollars and quantity is measure in bags of oranges..

Midwestern states experience unusually poor weather : Suppose the Corn producers throughout the Midwestern states experience unusually poor weather and so produce a smaller than normal harvest. Explain using a diagram how this harvest will affect Canadian Corn farmers?

Example of farmer and railroad tracks to explain bargaining : Ronald Coase used the example of a farmer and railroad tracks to explain bargaining. Sparks from trains running on tracks near farmland have the potential to set off fires in the fields. Consider the case where the law stipulated that railroads could..

Preferences stay constant across time : When the Smith family lived in Japan they consumed 4 lbs of rice per week and 2 lbs of potatoes per week. When the Smith family lived in Germany their consumption drastically changed to 4 lbs of potatoes per week and 2 lbs of rice per week. Although ..

Construction firms will submit sealed bids : A town wants to build a new bridge. Construction firms will submit sealed bids. The town will award the contract to the firm that submits the lowest bid and will pay the firm the amount of the second lowest bid (that is, the town will conduct a secon..

User Account

All Pages