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# HW1 - HW 1 Abigail Palmer 902048862 1 Suppose the demand...

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HW 1 Abigail Palmer 902048862 1. Suppose the demand curve for a product is given by Q=300-2p+4Y, where Y is average income measured in thousands of dollars. The supply curve is Q=3p-50. a. If Y=25, find the market clearing price and quantity for the product. Qd=400-2p Qs=3p-50 The market clearing price can be found by setting the supply curve and the demand curve equal to one another. 400-2p=Qd=Qs=3p-50 450=5p p=90 Therefore, the market clearing price is 90. To find the quantity supplied and demanded at this price, we substitute 90 for p in one of the equations. Qs=3*90-50=180-50=130 Therefore, the quantity for the product is 130. b. If Y=50, find the market clearing price and quantity for the product. Qd=500-2p Qs=3p-50 500-2p=Qd=Qs=3p-50 550=5p p=110 Therefore, the market clearing price is 110. Qs=3*110-50=330-50=280 Therefore, the quantity for the product is 280. c. Draw a graph to illustrate your answers.

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HW 1 Abigail Palmer 902048862 2. The supply of wheat in the US in 1998 is given by Q = 1944 + 207P and the demand by Q = 3244 – 283P. At the end of 1998, both Brazil and Indonesia opened their wheat markets to U.S. farmers. Suppose that these new markets add 200 million bushels to U.S. wheat demand. What will be the free market price of wheat
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