c. Describe what will happen to the market and solve for the equilibrium price and quantity under each of following assumptions: 1. The income of consumers increase by 50%, ceteris paribus. 2. The price of beef falls to P 90/day, ceteris paribus. 3. The wage rate in the poultry business is raised by 20%, ceteris paribus. 4. The price of feeds falls to P8/kg, ceteris paribus.
PLEASE ANSWER c
The Market for Chicken Meat in Davao City
a. Fill in the missing algebraic signs ( + or -) of the
according to the hypothesized direction of relationships.
where:
Q = quantity of chicken meat in kilograms, per day
PC =
I = income of average consumer (in pesos per day)
PB=price of beef (in pesos per kilogram)
W=wage rate paid in the poultry business (in pesos per day)
PF= price of mixed feeds (in pesos per kilogram)
Demand: QD = 20 ___ 1.5PC____0.8 I ____ 0.6 PB
Supply: QS = - 20 ___ 4.5PC____0.5 W ____ 3 PF
b. Suppose the other variable affecting the demand for and supply of chicken meat have the following
values: I = P300/day ; PB = P100/kg; W = P100/day; PF = P10/kg
i. Derive the simple demand and supply equations where Q is a function of P.
ii. Solve for the
iii. Suppose the government imposes a
1. What happens to the market for chicken?
2. Indicate the magnitude of the deviation of quantities demanded and supplied.
3. What can the government do in such a situation?
c. Describe what will happen to the market and solve for the equilibrium price and quantity
under each of following assumptions:
1. The income of consumers increase by 50%, ceteris paribus.
2. The price of beef falls to P 90/day, ceteris paribus.
3. The wage rate in the poultry business is raised by 20%, ceteris paribus.
4. The price of feeds falls to P8/kg, ceteris paribus.
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