Suppose the demand function for avocados is Q = 104 - 40p + 20tp + 0.01Y, where p is the price of avocados, pt is the price of tomatoes, and Y is average income, and the supply function for avocados is Q = 58 + 15p - 20pf, where pf is the price of fertilizer. Suppose pt = $0.80, Y = $4,000, and pf = $0.40. What is the equilibrium price and quantity of avocados? The equilibrium price of avocados is = $2.00 and the equilibrium quantity is Q = 80 units Suppose the government charges a $0.55 specific tax per avocado to be paid by consumers. With the tax, the equilibrium price of avocados is p = $1.60 and the equilibrium quantity is Q = 74 units.

Question

Thelma

Business

6 July, 17:02

Suppose the demand function for avocados is Q = 104 - 40p + 20tp + 0.01Y, where p is the price of avocados, pt is the price of tomatoes, and Y is average income, and the supply function for avocados is Q = 58 + 15p - 20pf, where pf is the price of fertilizer. Suppose pt = $0.80, Y = $4,000, and pf = $0.40. What is the equilibrium price and quantity of avocados? The equilibrium price of avocados is = $2.00 and the equilibrium quantity is Q = 80 units Suppose the government charges a $0.55 specific tax per avocado to be paid by consumers. With the tax, the equilibrium price of avocados is p = $1.60 and the equilibrium quantity is Q = 74 units.

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Answers (1)

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Leroy Sims · Answer 1

Answer: equilibrium price = 4

Quantity of avocado = 110units

Explanation:

Q = 104 - 40p + 20tp + 0.01Y ... eq1

Q = 58 + 15p - 20pf ... eq2

pt = $0.80,

Y = $4,000,

pf = $0.40

From eqn1 substituting of into it

Q = 104 - 40p + 20 ($0.80) + 0.01 ($4000)

= 104 - 40p + 16 + 40

= 160/40p

p = 4 equilibrium price

From eqn2. Substituting p and pf into it.

Q = 58 + 15p - 20pf

Q = 58 + 15 (4) - 20 ($0.40).

Q = 58 + 60 - 8

Q = 110 quantity of avocado