1. Congratulations, you've been hired as a market analyst for the Federation of Quebec Maple SyrupProducers (QMSP) and you will be responsible for monitoring the market for maple syrup. The market canbe described by the following calibrated demand and supply functions:Qd = 1180-20P +2P,(1)(2)Qs = 50P-200where P is the price of a 16oz bottle of syrup, Pį is the price for a bottle of maple flavored corn syrup, and Qdand Q, are the quantity demanded and the quantity supplied of maple syrup.(a) How much maple syrup should the QMSP be prepared to give away if they decided to give maple syrup toeveryone who wants it free of charge as a marketing ploy? (Hint: your answer will depend on Pt) Find theinverse demand and inverse supply equations. Determine the highest price at which suppliers would not bewilling to sell any syrup.(b) Assuming that P, = 10, graph (inverse) supply and (inverse) demand for the market with a clearly labeled graphand calculate the equilibrium price (P*) and quantity (Q*) for the market. Be sure to find and graph the pointswhere the curves intersect the axes.(c) Using calculus, find an expression for the impact of a small price change of maple flavored corn syrup on thequantity demand of maple syrup (note: we are asking only about a characterization of demand, not a changein the equilibrium). Provide a brief interpretation of your numerical result (no more than two sentences).(d) Now suppose that corn syrup becomes more expensive due to a corn blight and makes the price of mapleflavored corn syrup rise (Pi = 45). Maple syrup producers are ecstatic, thinking this will allow them tosignificantly raise the price of their own syrup. Calculate the new equilibrium price (P**) and quantity (Q**)for maple syrup. Illustrate the changes on your graph from part (a). Are the maple syrup producers right?%3D

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Answered: Qd = 1180- 20OP +2P, Q, = 50P-200

Business

Economics

Qd = 1180- 20OP +2P, Q, = 50P-200

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

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 10E

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