Section five: case study 1-Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, the dairies produce cream, which is made into ice cream. In the market for low-fat milk, Explain and draw the effect of each event on the supply of low-fat milk where the following events occur one at a time and the equilibrium points with drawing : (i) The wage rate of dairy workers rises. (ii) The price of cream rises. (iii) The price of low-fat milk rises. (iv) With the period of low rainfall extending, dairies raise their expected price of low-fat milk next year. (v) With advice from health-care experts, dairy farmers decide to switch from producing full cream milk to growing vegetables. (vi) A new technology lowers the cost of producing ice cream. 2-Consider the following equations for the demand and supply curves of Marconi (in million tons) in Cairo is given by covered in the last lecture : Qd = 1600 - 125P Qs = 440 + 165P where P is the price of macaroni in Egyptian Pound (EGP), Quantities are measured in millions of tones; prices are measured in pounds per tons i. Calculate the equilibrium price and quantity that will prevail in the market. ii. Suppose the price of rice increased, what will happen to the equilibrium point in macaroni market.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter3: Market Demand And Supply

Section: Chapter Questions

Problem 6SQP

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Section five: case study 1-Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, the dairies produce cream, which is made into ice cream. In the market for low-fat milk, Explain and draw the effect of each event on the supply of low-fat milk where the following events occur one at a time and the equilibrium points with drawing : (i) The wage rate of dairy workers rises. (ii) The price of cream rises. (iii) The price of low-fat milk rises. (iv) With the period of low rainfall extending, dairies raise their expected price of low-fat milk next year. (v) With advice from health-care experts, dairy farmers decide to switch from producing full cream milk to growing vegetables. (vi) A new technology lowers the cost of producing ice cream. 2-Consider the following equations for the demand and supply curves of Marconi (in million tons) in Cairo is given by covered in the last lecture : Qd = 1600 - 125P Qs = 440 + 165P where P is the price of macaroni in Egyptian Pound (EGP), Quantities are measured in millions of tones; prices are measured in pounds per tons i. Calculate the equilibrium price and quantity that will prevail in the market. ii. Suppose the price of rice increased, what will happen to the equilibrium point in macaroni market.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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