Homework set 7SolutionsExercise1The demand for yak butter is given by 150-3pdand the supply is 3ps-30, wherepdis the price paid by demanders andpsis the price received by suppliers, measuredin dollars per hundred pounds.Quantities demanded and supplied are measured inhundred-pound units.(1) On a graph, draw the demand curve and the supply curve for yak butter.(2)Write down the equation that you would solve to find the equilibrium price.(3) What is the equilibrium price of yak butter? What is the equilibrium quantity?Locate the equilibrium price and quantity on the graph, and label themp1andq1.(4) A terrible drought strikes the central Ohio steppes, traditional homeland of theyaks.The supply schedule shifts to 3ps-90.The demand schedule remains asbefore.Draw the new supply schedule.Write down the equation that you wouldsolve to find the new equilibrium price of yak butter.(5) What is the new equilibrium price and quantity?Locate the new equilibriumprice and quantity on the graph and label themp2andq2.(6) The government decides to relieve stricken yak butter consumers and producersby paying a subsidy of $10 per hundred pounds of yak butter to producers. Ifpdisthe price paid by demanders for yak butter, what is the total amount received byproducers for each unit they produce? When the price paid by consumers ispd, howmuch yak butter is produced?(7) Write down an equation that can be solved for the equilibrium price paid byconsumers, given the subsidy program.What are the equilibrium price paid byconsumers and the equilibrium quantity of yak butter now?(8) Suppose the government had paid the subsidy to consumers rather than produc-ers. What would be the equilibrium net price paid by consumers? What would the