Q1Consider the market for orange juice. In this market, the supply curve is given by QS = 100PJ −20PO and the demand curve is given by QD = 1000−150PJ +100PC, where J denotes orange juice, O denotes Orange, and C denotes coffee. Assume that PO = 10 and Pc = 8. Calculate the equilibrium price and quantity in the Orange juice market. Suppose that a poor harvest season raises the price of oranges to Po = 15 Is it possible to reach a market equilibrium if the price of orange juice PJ remains unchanged? Why? How much quantity of orange juice will finally be exchanged on the market? Find the market price necessary to restore equilibrium. Deduce the equilibrium quantity of orange juice. Draw a graph to illustrate your answers. Q2Suppose the price elasticity of demand for the market of mobile phones is 0.90. If all mobile-phone companies simultaneously increased their prices, will total revenue in the industry increase or decrease? If a single mobile-phone company increased its price, would you expect the company’s total revenue to increase or decrease? Explain. Suppose that the price in the market is initially $10 and the quantity demanded is 100 units. If the price in this market increases by 10%, what will be the percentage change in the quantity demanded?

Q1.1. Given that; QS = 100PJ −20PO QD = 1000−150PJ +100PC whereas; PO = 10 and Pc = 8

Answered: Consider the market for orange juice.…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter5: Markets In Motion And Price Controls

Section: Chapter Questions

Problem 10P

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Consider the market for orange juice. In this market, the supply curve is given by Q_S = 100P_J −20P_O and the demand curve is given by Q_D = 1000−150P_J +100P_C, where J denotes orange juice, O denotes Orange, and C denotes coffee.

Assume that P_O = 10 and P_c = 8. Calculate the equilibrium price and quantity in the Orange juice market.
Suppose that a poor harvest season raises the price of oranges to P_o = 15

Is it possible to reach a market equilibrium if the price of orange juice P_Jremains unchanged? Why? How much quantity of orange juice will finally be exchanged on the market?
Find the market price necessary to restore equilibrium. Deduce the equilibrium quantity of orange juice.

Draw a graph to illustrate your answers.

Suppose the price elasticity of demand for the market of mobile phones is 0.90.

If all mobile-phone companies simultaneously increased their prices, will total revenue in the industry increase or decrease?
If a single mobile-phone company increased its price, would you expect the company’s total revenue to increase or decrease? Explain.
Suppose that the price in the market is initially $10 and the quantity demanded is 100 units. If the price in this market increases by 10%, what will be the percentage change in the quantity demanded?

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