Gobbet_3_Supply_Schedule_Solution_Problem_Set

Gobbet_3_Supply_Schedule_Solution_Problem_Set - Gobbet #3:...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Gobbet #3: Market Supply (These problems are adapted from Callan and Thomas: Environmental Economics and Management , 2004) Consider the following supply schedule; PRICE (P) Quantity Supplied by Producers (bottles/month) $0.50 100 1.00 300 1.50 500 2.00 700 2.50 900 3.00 1,100 3.50 1,300 4.00 1,500 4.50 1,700 5.00 1,900 Plot the supply curve in product space (that is with prices along the vertical axis and quantity along the horizontal axis). Derive the linear supply and inverse supply equations from the table. Solution: Quantity Price Supply 0.25
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This problem uses the exact same techniques as described in the Gobbet 2 solution. Either equation can be found first, by using the point-slope formula. Just like with demand, the supply equation describes quantities as a function of price, while the inverse supply equation describes price as a function of quantities. This inverse demand equation is typically referred to as the marginal cost function, as it describes the additional cost of providing one more unit of the item. The supply equation has the form:
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This homework help was uploaded on 02/01/2009 for the course AEM 2500 taught by Professor Poe,g. during the Fall '07 term at Cornell University (Engineering School).

Page1 / 3

Gobbet_3_Supply_Schedule_Solution_Problem_Set - Gobbet #3:...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online