Ask Question
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.

+5
Answers (1)
  1. 6 July, 17:07
    0
    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
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “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, ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers