Consider the supply function: Qs = 60 + 5P – 12 PI + 10F , Where Qs = quantity supplied, P = price of the commodity, PI = price of a key input in the production process, and F = number of firms producing the commodity. (a)Derive the equation for the supply function when PI =$90 and F = 20. (b) Using the supply function from part (a), calculate the quantity supplied when the price of the commodity is $300 and $500. (c)Derive the inverse of the supply function in part (a). using the inverse supply function; calculate the supply price for 680 units of the commodity. Give an interpretation of the supply price.

Consider the supply function: Qs = 60 + 5P – 12 PI + 10F , Where Qs = quantity supplied, P = price of the commodity, PI = price of a key input in the production process, and F = number of firms producing the commodity. (a)Derive the equation for the supply function when PI =$90 and F = 20. (b) Using the supply function from part (a), calculate the quantity supplied when the price of the commodity is $300 and $500. (c)Derive the inverse of the supply function in part (a). using the inverse supply function; calculate the supply price for 680 units of the commodity. Give an interpretation of the supply price.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.7P

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