1. 2. 3. If no trade occurs between the markets, what are the equilibrium values of D₁, S1, P1, D2, S2, and P2? Solve algebraically. If the cost of transportation between the two markets is PT = 2, what would be the equilibrium values of D₁, S₁, P1, D2, S2, P2, QT, and PT? Solve algebraically. Show the above situation graphically, both with and without trade. Please label everything.
1. 2. 3. If no trade occurs between the markets, what are the equilibrium values of D₁, S1, P1, D2, S2, and P2? Solve algebraically. If the cost of transportation between the two markets is PT = 2, what would be the equilibrium values of D₁, S₁, P1, D2, S2, P2, QT, and PT? Solve algebraically. Show the above situation graphically, both with and without trade. Please label everything.
Chapter4: Demand, Supply, And Market Equilibrium
Section: Chapter Questions
Problem 25P
Related questions
Question
![Part 1: Spatial Equilibrium
The demand in market 1 is D₁ = 24 - P₁
The supply in market 1 is S₁ = -2 + P₁
The demand in market 2 is D₂ = 16 - P2
1.
Name:
The supply in market 2 is S₂ = 2 + P₂
If no trade occurs between the markets, what are the equilibrium values of D1, S1,
P1, D2, S2, and P2? Solve algebraically.
2.
AG BM 102
Lesson 11 Homework
3.
If the cost of transportation between the two markets is PT = 2, what would be the
equilibrium values of D₁, S₁, P1, D2, S2, P2, QT, and PT? Solve algebraically.
Show the above situation graphically, both with and without trade. Please label
everything.
[Insert an image of your graph here]
Part 2: Storage Equilibrium
Assume that the market supply curve for potatoes is Qs₁ = 12 + 0.5P, and that there are
two marketing periods for the crop. In the first marketing period the demand curve is:
QD1 = 24-P₁, in the second period it is: QD2= 18 - P2.
1. Draw a graph of the markets in the two periods showing prices and quantities if it
costs nothing to store potatoes. Be sure to label all the relevant features on your
graph.
[Insert an image of your graph here]
2. Show the prices and quantities in each period if it costs $5 per cwt. to store
potatoes for delivery in the second marketing period. Again, be sure to label all
relevant features on your graph (s).
[Insert an image of your graph here]
3. By comparing the results for 5 and 6 above explain how the cost of storage
affects prices and quantities in each period.
1](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa00d61f8-ed79-40e3-8ed8-a3a85bc9bb94%2Fa78e1e70-96ad-4e39-880f-285157bbf0cb%2Fua8u919_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Part 1: Spatial Equilibrium
The demand in market 1 is D₁ = 24 - P₁
The supply in market 1 is S₁ = -2 + P₁
The demand in market 2 is D₂ = 16 - P2
1.
Name:
The supply in market 2 is S₂ = 2 + P₂
If no trade occurs between the markets, what are the equilibrium values of D1, S1,
P1, D2, S2, and P2? Solve algebraically.
2.
AG BM 102
Lesson 11 Homework
3.
If the cost of transportation between the two markets is PT = 2, what would be the
equilibrium values of D₁, S₁, P1, D2, S2, P2, QT, and PT? Solve algebraically.
Show the above situation graphically, both with and without trade. Please label
everything.
[Insert an image of your graph here]
Part 2: Storage Equilibrium
Assume that the market supply curve for potatoes is Qs₁ = 12 + 0.5P, and that there are
two marketing periods for the crop. In the first marketing period the demand curve is:
QD1 = 24-P₁, in the second period it is: QD2= 18 - P2.
1. Draw a graph of the markets in the two periods showing prices and quantities if it
costs nothing to store potatoes. Be sure to label all the relevant features on your
graph.
[Insert an image of your graph here]
2. Show the prices and quantities in each period if it costs $5 per cwt. to store
potatoes for delivery in the second marketing period. Again, be sure to label all
relevant features on your graph (s).
[Insert an image of your graph here]
3. By comparing the results for 5 and 6 above explain how the cost of storage
affects prices and quantities in each period.
1
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