Florida Orange Juice is a product of Florida's Orange Growers' Association. Demand and supply of the product
Question:
Demand and supply functions for Florida orange juice are as follows:
QD = 4,500,000 - 1,200,000P + 2,000,000PS + 1,500Y + 100,000T (Demand)
QS = 8,000,000 + 2,400,000P - 500,000PL - 80,000PK - 120,000T (Supply)
Where P is the average price of Florida ($ per case), PS is the average retail price of canned soda ($ per case), Y is income (GNP in $billions), T is the average daily high temperature (degrees), PL is the average price of unskilled labor ($ per hour), and PK is the average cost of capital (in percent).
A. When quantity is expressed as a function of price, what are the Florida demand and supply curves if P = $11, PS = $5, Y = $12,000 billion, T = 75 degrees, PL = $6, and PK = 12.5%.
B. Calculate the surplus or shortage of Florida orange juice when P = $5, $10, and $15.
C. Calculate the market equilibrium price-output combination.
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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