j and l only 2. Assume equations 1 and 2 below were estimated from the data gathered that will representthe demand and supply functions respectively of an individual buyer and seller respectivelyfor product X.Eq. 1Eq. 2Qdx = 65,000 – 11.25Px + 15P, – 3.751 + 7.5AQsx = 7,500 + 14.25Px – 15P, – 3.75Cwhere Px - price of product X; Py - price of product Y; Iadvertising expenditure; Pz- price of product Z; and C- cost of production.average consumer's income; A Use the following additional information: the price of a related product, Y, is P41.25; theaverage consumer's income is P12,000; advertising expenditure is P2,500; the price of proluctZ is P90; and the cost of production is P1,200. There are 30 identical buyers and 50 identicalsellers in the market for product X.A. Is product X a normal or an inferior product? Justify.B. How are product X and product Y related for the buyer? Explain.C. On the part of the seller, what kind product Z is?D. Using the market demand function, what is Px that will make all the buyers stoppurchasing this product? Round-up to two decimals.E. What is the interpretation of the parameter a of the market demand function?F. What is the interpretation of the parameter b of the market demand function?G. What is the interpretation of the parameter d of the market supply function?H. What is the market price of product X? Round-up to two decimals.What is the equilibrium quantity in this market?J. What is the price range that will result to a surplus in the market?K. What is the price range that will result to a shortage in the market?I.If the government will intervene in this market and imposes that the minimum price will be20% more than the market price,L. How much would be the quantity demanded? Round-up to two decimals.M. How much would be the quantity supplied? Round-up to two decimals.N. From L and M, what is the condition in the market? Explain conciscly.If the new supply equation will be Qs'x = 26,250 + 712.50P'x,O. What would be the new equilibrium price (round-up to two decimals)?P. How many of this product will be bought and sold at this new market price? Round-upto two decimals.Q. What is the specific reason for this change in supply?

We have given that Qxd=65000-11.25Px+15Py-3.75I+7.5A .... (1) Qxs=7500+14.25Px-15Pz-3.75C…

Answered: I. What is the equilibrium quantity in…

I. What is the equilibrium quantity in this market? J. What is the price range that will result to a surplus in the market?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 5PA

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Question

j and l only

2. Assume equations 1 and 2 below were estimated from the data gathered that will represent
the demand and supply functions respectively of an individual buyer and seller respectively
for product X.
Eq. 1
Eq. 2
Qdx = 65,000 – 11.25Px + 15P, – 3.751 + 7.5A
Qsx = 7,500 + 14.25Px – 15P, – 3.75C
where Px - price of product X; Py - price of product Y; I
advertising expenditure; Pz- price of product Z; and C- cost of production.
average consumer's income; A

Use the following additional information: the price of a related product, Y, is P41.25; the
average consumer's income is P12,000; advertising expenditure is P2,500; the price of proluct
Z is P90; and the cost of production is P1,200. There are 30 identical buyers and 50 identical
sellers in the market for product X.
A. Is product X a normal or an inferior product? Justify.
B. How are product X and product Y related for the buyer? Explain.
C. On the part of the seller, what kind product Z is?
D. Using the market demand function, what is Px that will make all the buyers stop
purchasing this product? Round-up to two decimals.
E. What is the interpretation of the parameter a of the market demand function?
F. What is the interpretation of the parameter b of the market demand function?
G. What is the interpretation of the parameter d of the market supply function?
H. What is the market price of product X? Round-up to two decimals.
What is the equilibrium quantity in this market?
J. What is the price range that will result to a surplus in the market?
K. What is the price range that will result to a shortage in the market?
I.
If the government will intervene in this market and imposes that the minimum price will be
20% more than the market price,
L. How much would be the quantity demanded? Round-up to two decimals.
M. How much would be the quantity supplied? Round-up to two decimals.
N. From L and M, what is the condition in the market? Explain conciscly.
If the new supply equation will be Qs'x = 26,250 + 712.50P'x,
O. What would be the new equilibrium price (round-up to two decimals)?
P. How many of this product will be bought and sold at this new market price? Round-up
to two decimals.
Q. What is the specific reason for this change in supply?

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