ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Use the market
D. perfectly elastic demand
E. perfectly inelastic demand
Transcribed Image Text:Assume equations 1 and 2 below were estimated from the data gathered that will represent
the demand and supply functions respectively of an individual buyer and seller respectively
for product X.
Eq. 1
Eq. 2
Qdx = 65,000 – 11.25Px + 15P, – 3.751 + 7.5A
Qsx = 7,500 + 14.25Px – 15P, – 3.75C
where Px – price of product X; Py – price of product Y; I – average consumer's income; A
advertising expenditure; Pz – price of product Z; and C – cost of production.
Use the following additional information: the price of a related product, Y, is P41.25; the
average consumer's income is P12,000; advertising expenditure is P2,500; the price of product
Z is P90; and the cost of production is P1,200. There are 30 identical buyers and 50 identical
sellers in the market for product X.
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