Gobbet 4 - Market Equilibrium

# Gobbet 4 - Market Equilibrium - follows Demand Q d = 100P...

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Gobbet #4: Market Equilibrium (These problems are adapted from Callan and Thomas: Environmental Economics and Management , 2004) PRICE (P) Quantity Demanded by Consumers (bottles/month) Quantity Supplied by Producers (bottles/month) \$0.50 1,100 100 1.00 1,050 300 1.50 1,000 500 2.00 950 700 2.50 900 900 3.00 850 1,100 3.50 800 1,300 4.00 750 1,500 4.50 700 1,700 5.00 650 1,900 The equations representing demand, inverse demand, supply and inverse supply are as
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Unformatted text preview: follows: Demand: Q d = - 100P + 1,150 Inverse Demand: P = - 0.01 Q d + 11.5 Supply: Q s = 400 P - 100 Inverse Supply: P = 0.0025 Q s + .25 Using this information, determine the equilibrium price and quantity for bottled water in this market. Explain what will happen in the market if price equals \$4.00. What will happen if price equals \$2.00?...
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