 # 2. The demand function for YBOX is given as follows: P =1400 - Qd...

## Question

2. The demand function for YBOX is given as follows:
P =1400 - Qd
and the supply function is
P = 200 + 5Qs

where Qd and Qs are quantities demanded and supplied respectively and P is price.
(i) Plot the demand and supply curves on a scale diagram.
(ii) Calculate the equilibrium price and quantity. Explain how this equilibrium is achieved.
(iii) Define subsidy. Suppose the government imposes a subsidy of \$60, compute the new equilibrium price and quantity. Explain the effects of a subsidy.
(iv) Calculate the total payment made by the government to the producer in the form of a subsidy.
(v) Quantify the share of the subsidy to the consumer and the producer.
(vi) Define a production quota. Using the original demand and supply curve, assume the government imposes a quota of 100 units. Investigate and quantify the likely effects of the new price.

15. The demand and marginal cost curves of a monopolist are estimated by the following equations:
P = 500 – 0.40 Qd
MC = 60 + 0.20 Q
i) What is the equation for MR?
(ii) Calculate algebraically the profit-maximizing price and output.
(iii) Illustrate diagrammatically the profit-maximizing price and output.

## Solution Preview

These solutions may offer step-by-step problem-solving explanations or good writing examples that include modern styles of formatting and construction of bibliographies out of text citations and references. Students may use these solutions for personal skill-building and practice. Unethical use is strictly forbidden.

By purchasing this solution you'll be able to access the following files:
Solution.docx.

# 50% discount

Hours
Minutes
Seconds
\$20.00 \$10.00
for this solution

or FREE if you
register a new account!

PayPal, G Pay, ApplePay, Amazon Pay, and all major credit cards accepted.

### Find A Tutor

View available Economics Tutors

Get College Homework Help.

Are you sure you don't want to upload any files?

Fast tutor response requires as much info as possible.