# Here a 1250 and m d 0 25 from supply s 500 n 5 see

• Notes
• 2

This preview shows page 2. Sign up to view the full content.

Here a = 1250 and m d = 0 . 25. From supply , S = - 500, N = 5, see the formula sheet, IS P = - S N + 1 N Q = - ( - 500) 5 + 1 5 Q = 100 + 0 . 2 Q. Here b = 100 and m s = 0 . 2. NSB = ( a - b ) 2 2( m d + m s ) = (1250 - 100) 2 2(0 . 25 + 0 . 2) = 1150 2 0 . 9 = \$1 , 469 , 444 . 44 . 4. A freeze in Peru causes the price of coffee to skyrocket. What happens in the tea market in Peru? a. Tea supply will increase and the equilibrium price will go down and quantity will go up. b. Tea supply will increase and the equilibrium price will go up and quantity will go down. Tea demand will increase and the equilibrium price and quantity both will go up . d. Tea demand will decrease and the equilibrium price and quantity will both go up. e. Tea supply will decrease and the equilibrium price and quantity will both go up. Here coffee and tea are consumption substitute. When coffee price goes up, tea demand goes up. Therefore, equilibrium quantity and price of tea will go up. 5. If the price of hot dog decreases, which of the following changes to occur in the hot dog bun market? Both the equilibrium quantity and price of hot dog bun will go up . b. Both the equilibrium quantity and price of hot dog bun will go down. c. Equilibrium quantity will go up and price will go down. d. Equilibrium quantity will go down and price will go up. e. The supply of hot dog bun will go up. Hog dog and hot dog bun are a pair of consumption complement, when price of hot dog decreases, the demand for hot dog bun increases. Therefore, both equilibrium quantity and price of hot dog bun will increase.
You've reached the end of this preview.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern