What would happen to the equilibrium price and quantity

Assignment Help Managerial Economics

Reference no: EM13921822

Suppose that the demand function for wheat is QD = 1.1 - .25P + .1I, where P = the price of wheat and I = per capita income. The supply function for wheat is QS = 4.3 + .5P - .04Po, where Po = the price of oil. Currently, I = 20 and Po = 50.

a. Plot the supply curve and demand curve on the standard supply and demand graph.

b. Find the equilibrium price and quantity and depict it on your graph.

c. Calculate the resulting consumer surplus and producer surplus.

d. What would happen to the equilibrium price and quantity if income were to increase (holding other factors constant)? Give a brief economic explanation for why this would occur.

e. What would happen to the equilibrium price and quantity if the price of oil were to in- crease (holding other factors constant)? Give a brief economic explanation for why this would occur.

f. What would happen to the equilibrium price and quantity if income and the price of oil were both to increase at the same time? Give a brief economic explanation for why this would occur.

Reference no: EM13921822

Questions Cloud

Outstanding common stock for cash : On January 3, 20X9, Jane Company acquired 75 percent of Miller Company's outstanding common stock for cash. The fair value of the non-controlling interest was equal to a proportionate share of the book value of Miller Company's net assets at the date..

Exploring ancient mysteries : The cover page and the reference page are not included in the required assignment page length. For our purposes, you may omit any abstract page.

Potential legal and ethical issues : Recognize situations that present potential legal and ethical issues and develop solutions for those issues. Discuss the opportunities provided by technology for businesses.

Controllable variance : If productive capacity of 100% was 10,000 hours and the factory overhead cost budgeted at the level of 6,000 standard hours was $309,000, determine the variable factory overhead Controllable Variance, fixed factory overhead volume variance, and total..

What would happen to the equilibrium price and quantity : What would happen to the equilibrium price and quantity if income and the price of oil were both to increase at the same time? Give a brief economic explanation for why this would occur.

Determine the annual after tax interest cost : Determine the annual after tax interest cost for each company in dollars.

Analyze and explain international business strategies : Analyze and discuss the market indicators and factors that impact the international business, including statistical techniques, market demand, trade missions, trade fairs, marketing research, target market, and market segmentation.

Trunk diameters of mature pine : A field researcher is gathering data on the trunk diameters of mature pine and spruce trees in a certain area. The following are the results of his random sampling. Can he conclude, at the 0.10 level of significance, that the average trunk diame..

Will consumer expenditures on golf ball increase or decrease : Can you say anything about the elasticity of either the demand or supply curves from observing these effects? Will consumer expenditures on golf balls increase or decrease? Explain.

User Account

All Pages