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The demand function for pork is:
Qd = 300 – 100P + 0.01 INCOME,
where Qd is the tons of pork demanded in your city per week, P is the price of a pound of pork, and INCOME is the average household income in the city.
The supply function for pork is:
Qs = 200 + 150P – 30 COST,
where Qs is the tons of pork supplied in your city per week and COST is the cost of pig food.

If INCOME is $50,000 and COST is $5, what is the equilibrium price and quantity of pork?

Respuesta :

eooyibo123

Answer:

Equilibrium price= $3

Equilibrium quantity= 500 tons

Explanation:

At equilibrium, quantity demanded is equal to quantity supplied.

It was give that Income= $50,000

So Qd= 300- 100p +0.01(50,000)

Qd= 300- 100p + 500= 800- 100p

Also Cost is given as $5

So Qs= 200+ 150p- 30(5)

Qs= 200+150p- 150= 50+ 150p

At equilibrium Qd= Qs

800-100p= 50+ 150p

Rearranging you get

800-50= 100p+ 150p

750= 250p

750/250= p

$3= p

This is the equilibrium price, subsititute p in equation Qd= 800- 100p

Qd= 800- 100(3)

Qd= 800- 300= 500 tons

So 500 is the equilibrium quantity

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