(a) What are the general equilibrium prices of coffee and tea initially? (b) What are the general equilibrium prices after a frost damages the coffee crop?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

Please answer fast I'll rate you 

1. The following table shows the equations of some demand and supply curves for coffee and
tea.
Coffee
Tea
Initial Demand Curve
Q 120 50Pc + 40PT
Q=80-75PT + 20Pc
=
Initial Supply Curve
Q& = 80 + 20Pc
Q = 45+ 10PT
Supply Curve after Frost
Q& = 40 + 20Pc
= 45+ 10PT
Qf
(a) What are the general equilibrium prices of coffee and tea initially?
(b) What are the general equilibrium prices after a frost damages the coffee crop?
2. Matt has preferences for coffee (x) and pizza (y). His utility function is described by
U(x, y) = √xy. Suppose that the price of x is på and the price of y is Py Matt has an
income of m.
(a) Derive the demand curves for x ad y in terms of px, Py, m.
(b) Now assume that Matt has $100 of income, pz = $10 and py = $2. What is Matt's
optimal bundle?
(c) Draw Matt's budget constraint and mark his optimal bundle. Draw the indifference
curve and calculate the utility he receives from this bundle.
Transcribed Image Text:1. The following table shows the equations of some demand and supply curves for coffee and tea. Coffee Tea Initial Demand Curve Q 120 50Pc + 40PT Q=80-75PT + 20Pc = Initial Supply Curve Q& = 80 + 20Pc Q = 45+ 10PT Supply Curve after Frost Q& = 40 + 20Pc = 45+ 10PT Qf (a) What are the general equilibrium prices of coffee and tea initially? (b) What are the general equilibrium prices after a frost damages the coffee crop? 2. Matt has preferences for coffee (x) and pizza (y). His utility function is described by U(x, y) = √xy. Suppose that the price of x is på and the price of y is Py Matt has an income of m. (a) Derive the demand curves for x ad y in terms of px, Py, m. (b) Now assume that Matt has $100 of income, pz = $10 and py = $2. What is Matt's optimal bundle? (c) Draw Matt's budget constraint and mark his optimal bundle. Draw the indifference curve and calculate the utility he receives from this bundle.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Equilibrium Point
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education