(a) Consider two substitute goods, diesel and compressed natural gas. You are given the demand and supply function of diesel as follows Q 5.6000000000000005PC -3PD and Q = 16 + 6PD + 0.2Pc ; where Pp and Pc are the prices of diesel(D) and compressed natural gas(C), respectively. If the price of CNG is $8, what is the market price of diesel? Please give your answer in 2 decimal places. (b) Now, suppose government decides to regulate the price of diesel and they fix the price at $6.5, ceteris paribus, will there be a surplus or shortage? Calculate the amount of surplus/shortage. Please give your answer in 2 decimal places. (c) Suppose that the market for diesel is not regulated anymore. If the price of CNG has increased from $8 to $10, what will be the new market price of diesel? Please give your answer in 2 decimal places.

(a) Consider two substitute goods, diesel and compressed natural gas. You are given the demand and supply function of diesel as follows Q 5.6000000000000005PC -3PD and Q = 16 + 6PD + 0.2Pc ; where Pp and Pc are the prices of diesel(D) and compressed natural gas(C), respectively. If the price of CNG is $8, what is the market price of diesel? Please give your answer in 2 decimal places. (b) Now, suppose government decides to regulate the price of diesel and they fix the price at $6.5, ceteris paribus, will there be a surplus or shortage? Calculate the amount of surplus/shortage. Please give your answer in 2 decimal places. (c) Suppose that the market for diesel is not regulated anymore. If the price of CNG has increased from $8 to $10, what will be the new market price of diesel? Please give your answer in 2 decimal places.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter2: Fundamental Economic Concepts

Section: Chapter Questions

Problem 1E: For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect...

See similar textbooks

Similar questions

The demand equation for the BWS Bluetooth wireless loudspeaker is p = −0.07x + 250 where x is the quantity demanded per month and p is the unit price in dollars. The corresponding supply equation is given by p = 0.035x + 40 where x is the quantity demanded per month and p is the unit price in dollars. Find the equilibrium quantity and the equilibrium price for the BWS Bluetooth wireless loudspeakers. equilibrium quantity units equilibrium price $
Given below is the demand function for coconut oil. Q = 1,200 – 9.5P + 16.2Pp + 0.2 Y Where Q = quantity demanded of coconut oil P = price of coconut oil in cents per pound Pp = price of palm oil in cents per pound (palm oil is a substitute for coconut oil) Y = income of consumers Initially, Q = 1,275 thousand metric tons per year (Q = 1275) P = 45 cents per pound (P = 45) Pp = 31 cents per pound (Pp = 31) (a) Please calculate the Income at the above values of Q, P and Pp. and show your calculations (b) Please calculate the own point price elasticity of demand and show your calculations. (c) Please calculate the point cross elasticity of demand between palm oil and coconut oil and show your calculations.
Calculate the value of equilibrium price and equilibrium quantity of the commodity Y.When,the demand and supply equations of a commodity Y in a perfectlycompetitive market are given by :Qd = 1100 - 2PQs = 600 + 3P
Calculate the value of equilibrium price and equilibrium quantity of the commodity Z.When,the demand and supply equations of a commodity Z in a perfectlycompetitive market are given by :Qd = 1100 - 2PQs = 600 + 3P
The demand for petroleum is given by QD=85 − 0.4P where Q D is the quantity demanded in thousands of barrels per day and P is the price per barrel in dollars. The supply of petroleum is given by QS=55+0.6P. Calculate the equilibrium price and quantity in this market. 2. In the context of the problem in part (a), calculate the demand and supply for petroleum if the market price is $15 per barrel. What problem exists in the economy?
If the price of electric vehicles rises as individuals become wealthier, all else constant, then electric vehicles must be a _______ good - normal -inferior -substitute -complement
The demand for petroleum is given by QD=85 − 0.4? where Q Dis the quantity demanded in thousands of barrels per day and P is the price per barrel in dollars. The supply of petroleum is given by QS=55+0.6?. Calculate the equilibrium price and quantity in this market.
Consider a competitive market for the paper-making industry. The demand curve for paper is represented by the equation P = 120 – 2Q, while supply is represented by the equation P = 60 + Q, where Q is the quantity of paper (measured in tons) and P is the price of paper per ton for each paper mill (measured in dollars). Suppose the industry pollutes the environment by discharging waste chemicals that present a health risk to the public. a) What is the equilibrium price and quantity in the competitive market? b) Suppose the government determines that the social cost of unregulated paper-making activity is $30 per ton of paper. The government decides to internalise this activity through imposing the appropriate per unit tax on paper mills. What would be the socially optimal quantity of paper, and what would be the price for each paper mill?
The domestic supply and demand curves for hula beans are as follows: P = 50 + Q (supply) and P = 200 – Q (demand) where P is the price in cents per pound and Q is the quantity in millions of pounds. Ireland is a small producer in this market where the current price is 60 cents per pound. The Irish Government is considering a tariff of 40 cents per pound. The quantity of hula beans imported into Ireland after the tariff is A. 100B. 50C. 130D. 90
Suppose that the cost of crude oil decreases from $25 to $20 for each barrel of heating oil produced. Assuming that the rest of the determinants of supply and demand for heating oil remain equal to their initial values, the market will eventually reach a new equilibrium price of per barrel.
Consumers' Surplus The demand function for a certain brand of CD is given by p = −0.01x2 − 0.3x + 19 where p is the wholesale unit price in dollars and x is the quantity demanded each week, measured in units of a thousand. Determine the consumers' surplus (in dollars) if the market price is set at $9/disc. (Round your answer to two decimal places.) $
Given the following supply and demand functions find the equilibrium price and quantity in the market: Qd=195-20P Qs=-5+5P