AEM 4150
Price Analysis
Fall Semester 2009
Homework Assignment 4
Suggested Solutions
Problem 1
(a)
Demand Function
(1 point)
Qd = 29.81 – 1.78 P
LP
+ 5.23 P
Inkjet
– 1.49 P
Paper
+ 0.64 A + 2.11 I
(b) Supply function (1 point)
Qs = 3.78 + 2.33 P
LP
– 3.41 P
Cartridge
– 9.38 P
Lab
+ 5.67 T
(c) Equilibrium
The goal of part 1 and 2 of this question is to put the demand and supply equation is such a form
that we can solve for the equilibrium price and quantity.
1. We plug in the average values for all the variables except the price of laser printers and the
quantity (1 point):
Q
LP
= 29.81 – 1.78 P
LP
+ 5.23 (80) – 1.49 (5.50)+ 0.64 (90.71) + 2.11 (41.25)
Q
LP
= 29.81 – 1.78 P
LP
+
418.4 – 8.195 + 58.0544 + 87.0375
Q
LP
= 585.1069 – 1.78 P
LP
2. Similarly, to find the interceptprice form of the supply equation, we plug in the average values
for all the variables except the price of laser printers and the quantity (1 point):
Q
LP
= 3.78 + 2.33 P
LP
– 3.41(60) – 9.38 (10.5) + 5.67 (19.96)
Q
LP
= 3.78 + 2.33 P
LP
– 204.6 – 98.49 + 113.1732
Q
LP
= 186.1368 + 2.33 P
LP
3. We find the equilibrium price by either equating quantity demanded with quantity supplied or
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 '07
 KAISER,H.M.
 Supply And Demand, PLP, Laser Printers

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