The demand and supply functions for two interdependent commodities are given by: Op, = 120 – 2P, + P;; Qs, = -7 + 7P, Qp, = 168 + 3P, – 7P;; Qs, = -3 + 20P, (a) Explain whether these goods are complementary or substitutable. (b) Determine the equilibrium price and quantity. (c) The government decides to provide a subsidy of $4 on each unit of good 1 only. What effect does this subsidy have on the equilibrium prices of each good?

(a) Find the value of x, for which equilibrium ocurs and the corresponding equilibrium price pe (b) Sketch the graphs of the supply and demand curves, p = Sx) and p = D(x), on the same graph. (c) For what values of x is there a market shortage? A market surplus? 30. S(x) = 4x + 200 and D(x) - - 3x + 480

Find the Consumer Surplus and the Producer Surplus at the equilibrium price if the price-demand (D(x)) and the price-supply (S(x)) functions are as follows: D(x)=600 0.07x S(x) = 100+ 0.03x

The market for smart phone applications is characterized by the following demand and supply curves. QD = D(P) = 15 - 3P QS = S(P) = 5 + 10P (a) Calculate the equilibrium price and quantity for this market. (b) The government is considering introducing a per unit subsidy of t on each electric car that is purchased. Suppose that the statutory incidence of this subsidy will be on buyers. Using the equilibrium conditions, D(Pn - t) = S(Pn) = Q* (i.e. that demand equals supply in equilibrium), derive an equation in terms of es and ed that describes what fraction of the subsidy is borne by buyers/consumers. (c) Suppose that the unit tax is set at t = 0.1 per unit. What is the excess burden of this tax per dollar of revenue raised? (d) Suppose that we incorrectly assumed that supply was perfectly elastic and there was no impact of the tax on the equilibrium price received by sellers. Would EB/Tax Revenue be higher or lower than what you calculated in part (c)? In 4 sentences, explain your…

consider a market for two differentiated products. demand for good 1 is d1 = 1 - p1 + 1/4p2 and demand for second is d2 = 1-p2 + 1/4p1 where p1 and p2 are prices of the goods. Suppose firm 1 produces good 1 and firm 2 produces good 2. All production costs are sunk, that is, firms supply at zero production cost. Assume that firms compete in prices. (a) Calculate the diversion ratio. b) Derive the reaction function of each firm and calculate the Nash equilibrium in prices.

The demand and supply functions for two independent goods are given by: QD1 = 400 - 5P₁ - 3P₂ and QD2 = 300 - 2P₁ - 3P₂ Qs2 = -100 + 2P₂ Qs1 = -60 +3P₁ and Show that in equilibrium the prices satisfy [23] [²²] = [461] Using Cramer's rule find the equilibrium price of Good 1.

The demand and supply functions for two independent goods are given by: QD₁ = 502P₁ + P₂ and QD2 = 10 + P₁ - 4P₂ Qs1 = -21 + P₁ and Qs2 = -10 + 5P₂ Show that in equilibrium: R=2 Find the equilibrium prices.