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Equilibrium Price and Equilibrium Quantity Assignment | Homework For You

(4)Suppose a firm operates in a market described by the following equations:

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Q= 200-2P +0.75

Q= -100+3P-0.20C

where P = Price of commodity C = an index of the average cost of production 1 measure of consumer income

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(a)Write the expressions for the equilibrium price and the equilibrium quantity.

(b)Find the equilibrium price and the equilibrium quantity transacted in this market given that consumer income is $100 and the cost of production is $20

(c)Suppose the adoption of a new technology improves the efficiency of producing this commodity by 10 units, discuss the impact on the equilibrium values established in part (b) c this question.

(d) Assume that a shift in consumer preferences increased the consumption of this commodity by 20 units (prior to the induced technological innovation) how would this affect equilibrium price and equilibrium quantity transacted in part (b)? (e)ls this commodity a necessity, a luxury good or an inferior good? Provide a brief explanation. Get Economics homework help today

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