The demand and supply functions for the world truffle, Ask an Expert

Economics

The demand and supply functions for the world truffle market are given by

QD = 48, 000 - 40P

QS = -3000 + 10P,

where P is the per-pound price of truffles in dollars.

(a) Find the equilibrium price and quantity of truffles.

(b) Graph the market for truffles . Clearly mark the following: (1) market equilibrium price and quantity, (2) the area of consumer surplus, and (3) the area of producer surplus.

(d) Suppose that a disease strikes wild boars, which are used to ?nd and harvest truffles. This reduces the supply of truffles at every price by 500 pounds. Demand for truffles is unchanged.

i. Explain and graph the effect of this disease on the market for tru?es. How are the equilibrium price and quantity affected? Be sure to mark the new equilibrium price and quantity, and mark the areas of the new total consumer and producer surpluses.

ii. Find the new equilibrium price and quantity after the disease has struck.

iii. Calculate the new level of total consumer and producer surplus after the disease has struck.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9761830

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