Unformatted text preview: equation for the derived retail supply function (Sr). Show your calculations. Plot these equations in the diagram. (c) Calculate the equilibrium quantity of apples (Q*) and the equilibrium values of retail price (Pr*) and farm price (Pf*). Show calculations. Identify these values in the diagram. (d) Suppose that due to the high energy cost, transportation costs increase by $2 per million sacks of apples. (i) Find the new marketing margin equation. (ii) What are the new equilibrium values of Q**, Pr**, and Pf**? (iii) What is the consumers’ share of this burden (transportation cost increase)? What is the farmers’ share of this burden (transportation cost increase)? (e) Now suppose the marketing margin equation is given by: MM = 4 – 0.5Q Find the new equilibrium values of Q***, Pr***, and Pf***....
View Full Document
- Fall '07
- Supply And Demand, retail price, marketing margin equation, price dependent form, new equilibrium values