Given below are the demand and supply functions for three interdependent commodities. Qd1 = 90 – 2P1 + 3P2 – 5P3 ; Qs1 = P1 – 10 Qd2 = 36 + 3P1 – 3P2 + 2P3 ; Qs2 = –14 + P2 Qd3 = 45 – 3P1 + 3P2 – 3P3 ; Qs3 = P3 – 20 a. Determine the equilibrium prices and quantities for the three commodity Market model. b. Compute the price and cross elasticities of demand for all three markets and interpret their coefficients.
Given below are the demand and supply functions for three interdependent commodities. Qd1 = 90 – 2P1 + 3P2 – 5P3 ; Qs1 = P1 – 10 Qd2 = 36 + 3P1 – 3P2 + 2P3 ; Qs2 = –14 + P2 Qd3 = 45 – 3P1 + 3P2 – 3P3 ; Qs3 = P3 – 20 a. Determine the equilibrium prices and quantities for the three commodity Market model. b. Compute the price and cross elasticities of demand for all three markets and interpret their coefficients.
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.13P
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Given below are the demand and supply functions for three interdependent commodities.
Qd1 = 90 – 2P1 + 3P2 – 5P3 ; Qs1 = P1 – 10
Qd2 = 36 + 3P1 – 3P2 + 2P3 ; Qs2 = –14 + P2
Qd3 = 45 – 3P1 + 3P2 – 3P3 ; Qs3 = P3 – 20
a. Determine the
b. Compute the price and cross elasticities of demand for all three markets and interpret their coefficients.
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