Question 1: Assume we are given a demand schedule that is represented by P = 200 - 5Q and a supply schedule where P = 110 + 10Q, where P = Price and Q = Quantity. What are the equilibrium price and quantity (show all of your work)?
Question 2: Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, dairies produce cream, which in turn makes ice cream. In the market for low-fat milk, the following events occur:
a) The wage of dairy worker rises
b) The price of cream rises
c) The price of low-fat milk rises
d) A new technology lowers the cost of producing ice cream
e) Dairy farmers switch some of the production of full-cream to vegetables, based on input from health research studies.
Explain the effects of each of the above events on the supply of low-fat milk.
Question 1: Assume we are given a demand schedule that is represented by P = 200 - 5Q and a supply schedule where P = 110 + 10Q, where P = Price and Q = Quantity. What are the equilibrium price and quantity (show all of your work)?
Question 2: Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, dairies produce cream, which in turn makes ice cream. In the market for low-fat milk, the following events occur:
a) The wage of dairy worker rises
b) The price of cream rises
c) The price of low-fat milk rises
d) A new technology lowers the cost of producing ice cream
e) Dairy farmers switch some of the production of full-cream to vegetables, based on input from health research studies.
Explain the effects of each of the above events on the supply of low-fat milk.
