Suppose that market demand and supply of cookies in a small town are given by Q = 180 – 10P Q = 30 +...

Question

Suppose that market demand and supply of cookies in a small town are given by Q = 180 – 10P Q = 30 + 5P A. Calculate the equilibrium price and quantity of cookies and illustrate the equilibrium point on a graph. B. Suppose that the current market price is $7. Will there be excess supply or excess demand in this market? By how much? Show all your steps. C. Suppose that the current market price is $12. Will there be excess supply or excess demand in this market? By how much? Show all your steps. D. Suppose that cookies producers advertised that they started using healthier ingredients that significantly reduce their cookies’ total fat and calories. Consumers respond to those ads by changing their demand by 30 units at each price. What are the new demand and supply functions? What are the new equilibrium quantity and price? Show all your steps.

David · Accepted Answer

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Suppose that market demand and supply of cookies in a small town are given by Q = 180 – 10P Q = 30 + 5P A. Calculate the equilibrium price and quantity of cookies and illustrate the equilibrium point...

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