The demand curve for peaches is given by the equation Qd = 100 4P, where P
Question:
The demand curve for peaches is given by the equation Qd = 100 − 4P, where P is the price of peaches expressed in cents per pound and Qd is the quantity of peaches demanded (expressed in thousands of bushels per year). The supply curve for peaches is given by Qs = RP, where R is the amount of rainfall (inches per month during the growing season) and Qs is the quantity of peaches supplied (expressed in thousands of bushels per year). Let P* denote the market equilibrium price and Q* denote the market equilibrium quantity. Complete the following table showing how the equilibrium quantity and price vary with the amount of rainfall. Verify that when R = 1, the equilibrium price is 20 cents per pound and the equilibrium quantity is 20,000 bushels per year.
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R 1 2 4 8 16 Q 20 P 20 1667 When R 1 the equilibrium occurs where Q d Q s or 10...View the full answer
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