The estimated monthly U.S. demand function for avocados is Q = 144 − 40p + 20pt where p is the price of avocados and pt is the price of tomatoes, a substitute for avocados. The estmated supply function is Q = 58 + 15p − 20pf where the price of fertilizer, pf , is $0.40, so the supply function can be written as

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter2: Fundamental Economic Concepts
Section: Chapter Questions
Problem 2E
icon
Related questions
Question

The estimated monthly U.S. demand function for avocados is
Q = 144 − 40p + 20pt where p is the price of avocados and pt is the price of tomatoes, a substitute for avocados.

The estmated supply function is Q = 58 + 15p − 20pf where the price of fertilizer, pf , is $0.40, so the supply function can be written as
Q = 50 + 15p. 

The initial price of tomatoes is $0.80 per lb. Using algebra, determine the initial equilibrium price and quantity of avocados, and then determine how price and quantity change if the price of tomatoes increases by $0.55 to $1.35

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Profits
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning